bankruptcy blog
Sick of Medical Debt
You are looking at the ceiling of the inside of the ambulance as a mysterious sharp pain pulses in your abdomen. Last you remember, you were playing with your kids at your seven-year-old daughter’s birthday party. Your ex-husband had actually decided to come this year and even brought the chocolate cake, your daughter’s favorite. You close your eyes, bracing for the next wave of pain. The ambulance rumbles into the hospital parking lot. The medics throw open the back doors of the ambulance and roll the gurney onto the ground and through the hospital’s automatic doors. As you can recall later, you are asked questions regarding your place of birth and the name of the current president. It is all a blur.
You wake up in a hospital bed in a deep foggy haze. The doctor tells you that you will have to take it easy, which is easier said than done. You work on your feet all day as a teacher’s aide and have three kids under the age of 10. There are no days off. You end up having to take two unpaid weeks off from work to recover from your hospital stay. To keep it all together, you use your credit card to make your car payment and that month’s rent.
Then the hospital bills start rolling in. There is one for the ambulance ride, another for the emergency room, yet another for the blood testing, one for the medical imaging, two for different specialists and a separate bill for the hospital stay. You are overwhelmed. The total for the stay is more than you can afford to pay. The medical provider suggests that you apply for a loan, but you’re nervous that your credit will prevent you from obtaining any additional loans.
You are not alone (see NPR coverage called "Bill of the Month"). More people are insured than ever before. However, many are still struggling to pay their medical bills. The Consumer Financial Protection Bureau, who oversees consumer financial trends and behavior, released data in 2014 estimating that 43 million people have medical debt that is damaging their credit.
When navigating medical debt, you need to know that you have options and rights. Many healthcare providers want to work with you to ensure that you can repay the amounts owed. In some instances you can apply for financial assistance. You may be surprised that you qualify and end up paying nothing on the medical bills.
Medical debt and the subsequent collection practices can be confusing. As such, stay organized. You should keep notes of who you spoke with, the date you spoke to them, and the subject matter discussed.
Know that you can request proof of the debt in writing. The collector has to prove that the debt is valid. Starting September 15, 2017, the three major reporting agencies, Experian, Equifax and TransUnion, will set a 180-day waiting period before medical debt can be reported on your credit report. Once the medical debt is paid, you should request that the medical debt be removed from your credit report.
Your life can change in big ways in a flash. When that happens, you should know that you can get back on your feet and achieve financial wellness.
Bankruptcy: A Fresh Start
You walk out of your house in the morning to find that your vehicle is not in the driveway. You look again, discovering that it has not suddenly reappeared. Bewildered, a multitude of thoughts rush through your head. Was it stolen? Did it get repossessed? How will I get to work? What do I do now?
You just started your new job after being unemployed for several months. During that time, you fell behind on your bills, using up most of your savings and cashing out a retirement account. You had to decide whether to make your car loan payment or feed your kids. You chose the latter. Your ex-spouse only sporadically pays the court-ordered child support payment of $500. He now owes you close to $60,000.
You’re the responsible one. You juggle it all. You’re doing the best you can.
For the last couple of months your phone has been blowing up nonstop with calls from creditors. Past-due notices and final requests are stockpiled on your kitchen table. Each dollar and debt is tracked on a notepad. You have been figuring out how you could make this all work. It is overwhelming.
You walk back inside and look for your car loan statement to find a number to call because you’re worst fear has come true, your car lender repossessed your car. You know exactly where it is. The person on the other side of the phone explains that you can cure your car loan with a $2,500.00 payment today. You don’t receive your first paycheck for two weeks and have $1,000 in your bank account, the last remaining from your tax refund. You have rent, utilities, and groceries to pay for, which will eat up that money.
You are not alone. In the first three months of 2017, 966 bankruptcy cases were filed in Nebraska. The reasons for filing a bankruptcy run the gambit from overwhelming medical debt to a sudden loss of income. Considering bankruptcy is a smart decision if you are having difficulty paying your debt on top of your monthly living expenses, including items such as your rent, mortgage, groceries, and car insurance.
You may qualify to file a Chapter 13 where you retain all of your property and pay some or all of your debts though a payment plan that lasts 3-5 years. A Chapter 13 can help you save your car or house if you have fallen behind. You may qualify to pay only a portion of your unsecured debt (medical bills and credit cards) without interest, which is a paramount benefit of the Chapter 13 bankruptcy.
You may qualify to file a Chapter 7 where you can keep all of your property and eliminate all of your debt with some exceptions like student loans, child support, and most tax debt. By filing a Chapter 7, you would receive the benefit of a fresh financial start, allowing you to move on to rebuild your credit sooner rather than later.
Deciding whether to file a bankruptcy is a complex and emotional decision. Finding the right attorney to work with you to make that decision is crucial. Instead of worrying what will come next, you should meet with a bankruptcy attorney to discover your options for dealing with your financial situation.
You’re not in this alone.