Could Medical Bankruptcy Protect Your Resources? What to Do If You Need Help Now
Most people are surprised to find that of the estimated $1.5 million bankruptcies that will be filed this year, 62% of them will be the direct consequence of medical issues. Even more astonishing is the fact that of these filing for medical bankruptcy, over 80% really had medical insurance. Not surprisingly, they was able to rack up medical obligations that strategy very nearly $18,000! This is only $9,000 significantly less than the amounts owed by persons who filed for bankruptcy due to medical reasons that lacked medical insurance..
Of the issue is the aggressive nature of the medical debt collection industry. part while $18,000 appears like a tiny amount of debt to create a bankruptcy,. When you default on a credit debt, the likelihood of you being charged are actually quite slim. More likely is that the banker works with you to establish some sort of acceptable payment plan.
In contrast, medical collectors appear to prefer litigation. They'll frequently file lawsuits in small claims court on portions therefore small that a lot of other lenders might have not even bothered. Because most people are not used to working with lawsuits, it is no surprise that numerous people panic and resort to filing for bankruptcy protection.
What's a Medical Bankruptcy
Theoretically speaking, there is no such thing as a 'medical' bankruptcy. The only sorts of personal bankruptcies are Chapter 7 bankruptcy and Chapter 13 bankruptcy. There's no distinction by the cause of a bankruptcy.
Broadly speaking, however, a bankruptcy that's categorized as medical is any bankruptcy that's filed due to medical reasons. This is often brought on by abnormal medical bills, or even a lack of money because of illness. In some instances, it's actually the consequence of an individual finding a second mortgage to cover their expenses. If medical issues were the direct reason for the bankruptcy, it can be known as a bankruptcy.
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The Medical Bankruptcy Equity Act of 2008
An act was introduced to Congress in 2008 which if approved, would give a legal distinction for chapter 7 bankruptcy. This Act would exempt $250,000 of home equity for those filing bankruptcy due to medical reasons.. It'd also eradicate the means test for individuals filing bankruptcy due to medical conditions. This implies that many people with medical obligations that are now forced into Chapter 13 will be able to declare Chapter 7. The act offers some relief to caregivers of the seriously ill.