Wondering what to do about medical debt? You’ve probably heard that medical bills are the kind of unsecured debt that can be discharged in a bankruptcy case. This is true. However, there are three important considerations to keep in mind when deciding to file a bankruptcy case to discharge medical debt, which we discuss below.
Why File for Bankruptcy?
The point of filing bankruptcy is to get a fresh start. What kind of fresh start has you searching for new medical providers, or dealing with post-petition debts that are not discharged, or having a lien placed on your house that you must satisfy if you sell or refinance?
Medical bankruptcies are very common, unfortunately. And if you have medical debt due to COVID-19, there are additional considerations. If you are dealing with medical debt you cannot pay, contact The Law Offices of David M. Offen to schedule a consultation with a bankruptcy attorney. We will help you time your bankruptcy filing to get the maximum amount of medical debt discharged — even if you need to file bankruptcy with no money.
Using careful strategy and forethought to plan the timing of your filing will get the best result possible for you. Our bankruptcy attorneys have been able to save people tens of thousands of dollars with proper planning that would otherwise have been owed to medical providers.
3 Considerations When Filing Bankruptcy to Discharge Medical Debt
If you wish to file a bankruptcy case to discharge medical debt, here are three important considerations to keep in mind.
1. If you have just fallen ill or just had surgery, you may want to wait to discharge medical bills in bankruptcy.
Why? Because if you file too soon, you risk failing to capture medical bills that are incurred after the date you file. Post-petition medical bills are not discharged, and you will still be responsible for paying them.
Talk with your medical providers to find out what treatment, therapies, or medications you will likely need in the short term and in the long term. This will be valuable information in determining when to file your bankruptcy case.
People with medical debt rarely file bankruptcy right away for this reason. However …
2. If you are being sued over medical debt, you may want to file bankruptcy sooner rather than later.
Doctors rarely sue their patients. It is more likely that your debt will be sold to a medical bill collection agency, which will hound you day in night with letters, phone calls, and threats. After a few months of this the agency may sue you.
If you fail to defend in a medical bill collection lawsuit, or you defend and lose to the plaintiff debt collector or creditor, the court will enter a money judgment against you. The plaintiff can then levy your bank accounts or other property, or the plaintiff may choose to file a state-wide lien on your real property. This means that if you refinance or sell your home, that debt must be paid.
If debt collectors are harassing you over medical debt, or if you have been sued by a medical bill collector or medical provider, contact our bankruptcy attorneys. We can discuss the timing of a bankruptcy petition so that the debt collector does not have time to file a lien on your property or seize any of your money.
What to do if you face ongoing medical expenses and a medical debt lawsuit at the same time
If you are not done with treatment and know that you will face more medical bills in the future, yet you are being sued or threatened with a lawsuit over medical debt, consult a bankruptcy attorney who will help you weigh your options and decide the best timing of your filing.
3. If you like your doctors and require continuing care, you may want to pay them.
It is possible that if you file bankruptcy and get your doctor’s bills discharged, that doctor will decline to see you again.
If you want to keep this doctor, know that it is not permissible to take that debt out of your bankruptcy filing and continue to pay it while getting your other debts discharged. This is called “preferential treatment” of one creditor over another, and many a trustee and creditor has objected to discharge on this basis.
To do this right, we must include all of your medical and other unsecured debts in your bankruptcy filing and get them discharged. However, there is no law in the Bankruptcy Code forbidding you from paying back a discharged debt after the bankruptcy is over. Know that this is an option for you if this situation applies.
Speak with an Experienced Bankruptcy Lawyer in Philadelphia about Clearing Your Medical Debt
As you’ve read, two or all three of these considerations can compete for priority in any individual case, and it can be a challenge to figure out what is best to do. File now? Wait to file? Don’t file at all?
Our bankruptcy attorneys will help you decide. Give The Law Offices of David M. Offen a call at 215-625-9600 to schedule your free, no-obligation consultation.
We will take a look at your overall financial situation, including whether you need to discharge credit card debt in bankruptcy or have alimony or child support arrears, as well as your past and continuing medical status, and help you determine what course of action is best for you. We will help you get that fresh start.