The top reason for bankruptcy isn’t a poor employment record, careless spending, or a casual attitude toward financial responsibility. In 2020, the leading cause of bankruptcy in the U.S. is medical debt. If you’re considering bankruptcy, speak with a Massachusetts debt relief attorney first.

When you require extensive medical care, health insurance may not provide what is needed. According to CNBC, 137 million of us in the U.S. are struggling with paying medical bills. The high cost of medical care doesn’t help. The average hospital stay in the U.S. costs $5,220 a day.

Medical costs increase with age, so many people who are over 65 are in debt that they can’t pay even with insurance and government assistance.

What Problems are Medical Debts Creating?

The fear of medical debt is having severe consequences in the United States. The fear of debt is causing some people to overlook their own medical issues. Researchers tell us that nearly one in three adults in the U.S. have delayed their own medical care because of worries about the cost.

Medical debts create other financial difficulties for consumers. According to the Kaiser Family Foundation, among U.S. consumers with medical bills in collection:

1. Fifteen percent owe $10,000 or more.
2. Thirty-three percent owe on a student loan.
3. Seventeen percent also owe a payday lender.
4. Fifty-eight percent have been contacted by a collection agency.

Many who file for bankruptcy in Massachusetts recently have been – or still are – seriously ill or severely injured. Especially as a result of the COVID-19 pandemic, bankruptcy filings are expected to increase – in Massachusetts and every other state – in the foreseeable future.

What Can You Do About Medical Debts?

If you are struggling to pay your medical bills, check again to ensure that you haven’t been sent duplicate bills and to ensure that you genuinely owe the amounts that you’ve been charged.

It’s possible that you are being pursued for a medical debt mistakenly or even illegally. It happens frequently. If the party that is pursuing you is a debt purchasing company, you may not owe that company anything, but you’ll need to discuss your rights with a debt defense attorney.

However, if legitimate medical debts are crushing you, bankruptcy is one option, but it’s not your only alternative, and it is not for everyone. Debt payment plans can sometimes be negotiated with some healthcare providers, but the sooner you act, the better.

When Should You Speak to a Bankruptcy Lawyer?

As your medical debts rise, your options are reduced, but before filing for bankruptcy, have your income, debts, assets, and property thoroughly evaluated by a Plymouth bankruptcy lawyer.

For most Massachusetts consumers who struggle with medical debts, bankruptcy is a last resort with some genuinely negative – but temporary – consequences. Still, if your medical debts pile up and you take no action at all, you might end up in an even worse situation.

For example, a medical provider may sue and win a judgment against you. Then your wages can be garnished and a lien could be placed against your property. If you file for bankruptcy before that happens, bankruptcy keeps creditors from taking such actions during the bankruptcy process.

Apart From Bankruptcy, What Are Your Options?

If your credit is good, you may be able to settle medical bills without bankruptcy by negotiating for a payment plan that you can live with. Most hospitals and medical providers discount or even waive bills routinely for those who pay cash and/or have no health insurance.

You should also learn about the assistance programs that most hospitals offer. You can contact a hospital’s financial assistance counselor to learn more and to apply if you are eligible.

However, if you cannot resolve a medical debt, and the creditor pursues you, your credit will plummet because the creditor’s action will appear in your credit report. But if you act in time, bankruptcy can wipe out medical debt.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

If you don’t earn much money, and if you qualify by passing a means test, a “Chapter 7” bankruptcy may be the best option for you. Medical debts and other unsecured debts (debts not secured by collateral) are eliminated – the legal term is “discharged” – by Chapter 7 bankruptcy.

You should understand that certain debts are non-dischargeable, which means that they are not wiped out by filing for bankruptcy. Non-dischargeable debts include student loan debt, tax debt, alimony and child support debts, and any payment owed to or ordered by a court.

At your first consultation with a bankruptcy attorney, you’ll be asked a series of questions to determine if you are eligible for a Chapter 7 bankruptcy. An attorney will review your assets, income, and debts.

If you do not qualify for a Chapter 7 bankruptcy, or if you have assets that might be lost through a Chapter 7 bankruptcy, you may file for a Chapter 13 bankruptcy. You’ll pay part of the debt in the bankruptcy process, and the court then discharges what remains at the end of the process.

What Else is Required for Bankruptcy?

In either case, you’ll need guidance and personalized advice from a Massachusetts bankruptcy attorney who has comprehensively reviewed your situation and your finances.

The law requires you to complete a Credit Counseling Course prior to filing for bankruptcy and also to complete a Financial Management Course before the conclusion of the bankruptcy process.

If you understand the consequences of filing for bankruptcy, and you’re willing to deal with the consequences, bankruptcy might be right for you.

The Time to Deal With Medical Debt is Now

As mentioned previously, it’s older consumers who tend to struggle with medical debts because those debts increase with age. For many older consumers, the only realistic option is bankruptcy. If you’re advised by the right bankruptcy attorney, there’s nothing to fear.

No one is left penniless by bankruptcy. Many people, in fact, are able to retain their residences and vehicles. There is no list of rules for how to reestablish credit after bankruptcy. That will be different for each consumer, but it’s done all the time.

Even if you’ve worked for years and you’ve scrupulously avoided acquiring debts, you could accumulate staggering medical debts through no fault of your own. If this describes you, bankruptcy can allow you to reboot your finances and give you a fresh financial start.

Contact a Plymouth bankruptcy attorney to learn more or to begin the bankruptcy process. If you are struggling with medical debts, the time to deal with those debts is now.