Could Medical Bankruptcy Defend Your Resources? What to Do If You Need Help Now

September 11, 2013

Most people are surprised to discover that of the estimated $1.5 million bankruptcies that will be filed this year, 62% of them will be the direct result of medical issues. Much more astonishing is the fact that of those filing for medical bankruptcy, over 80% basically had medical insurance. Not surprisingly, they were able to stand up medical debts that strategy almost $18,000! This really is just $9,000 less-than the amounts owed by persons who filed for bankruptcy due to medical factors that lacked medical insurance..

Of the issue is the aggressive character of the medical debt collection industry. part while $18,000 appears like a tiny amount of debt to cause a bankruptcy,. When you default on the credit debt, the odds of you being charged are actually quite slim. More likely is that the banker works with you to determine some type of acceptable payment plan.

On the other hand, medical collectors seem to prefer litigation. They will often file lawsuits in small claims court on amounts so small that a lot of other lenders would have not even bothered. It's no real surprise that lots of people panic and resort to filing for bankruptcy protection, because most people aren't accustomed to coping with lawsuits.

What's a Medical Bankruptcy

Theoretically speaking, there is no such thing like a 'medical' bankruptcy. The only types of personal bankruptcies are Chapter 7 bankruptcy and Chapter 13 bankruptcy. There is no difference by the reason behind a bankruptcy.

Generally, however, a bankruptcy that is categorized as medical is any bankruptcy that's filed due to medical reasons. This is often brought on by excessive medical bills, or a loss of money because of illness. In some instances, it is also the result of someone obtaining a 2nd mortgage to cover their expenses. If medical problems were the direct reason for the bankruptcy, it may be referred to as a bankruptcy.

More information is found on this website.

The Medical Bankruptcy Fairness Act of 2008

An act was presented to Congress in 2008 which if approved, would supply a legal difference for bankruptcy chapter 7. This Act would exempt $250,000 of home equity for anyone filing bankruptcy because of medical reasons.. It would also remove the means test for individuals filing bankruptcy because of medical conditions. What this means is that many people with medical obligations that are now forced into Chapter 13 would be able to declare Chapter 7. The work offers some relief to caregivers of the seriously ill.

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