Unlike many forms of debt, medical debt generally arrives out of the unexpected: an illness or injury. The surprise aspect of medical debt generally means that such a great debt arrives suddenly and out of the blue, hurting your credit and finances and leaving you forced to consider bankruptcy.
As it turns out, medical debt is actually a leading cause of bankruptcy filing in the US, so a bankruptcy filing to solve the medical debt problem in your life seems to be a viable solution.
The Problems and Solutions
Sadly, health insurance rarely helps with medical debt situations, despite the fact that the majority of those with the problem have a health insurance plan. Unfortunately, many modern insurance policies contain loopholes or escape clauses for providers so they can avoid having to help you get through medical debt problems.
When it comes to the actual filing for bankruptcy, one should consider either Chapter 7 or Chapter 13. Chapter 7 involves immediate liquidation of assets to pay off debts. In this case, medical debt is treated like credit card debt and paid off in much the same way. For something like Chapter 13, you would be placed on an installment-paying plan through a court-organized reorganization of your assets.
If your medical treatment is ongoing, don’t go for Chapter 7, as you must wait a mandatory eight years before being able to file under Chapter 7 again.
Before filing, consider getting in touch with healthcare providers and seeing if it is possible to negotiate forgiveness or discounts on treatment. In addition, many debtors who paid for medical bills with credit cards may qualify for debt-management solutions. However, these are all slippery slopes that could lead to further debt problems if not handled properly.