Medical bankruptcy is also known as medical debt. It is a declaration that is made (legally), stating that a person is completely unable to pay his or her medical debts. The absolute formal bankruptcy processes differ from one region (country and state) to another. However, they normally are about a person making a plan to have his/her debts pardoned, in exchange of surrendering his or her own personal possessions. One may also agree to some type of arrangement to make the payments. The most common case of this is when one finds himself or herself in debts as a result of bills that relate to a serious illness or severe injury.
Medical debt, unlike other types of debt, is usually brought into existence by accident or faultlessly. This is because people do not have any control over circumstances that involve falling ill or getting injured – that lead to having health care services that become unaffordable. Since these healthcare remedies are usually unavoidable and one cannot do without them, more sympathy is found in medical debt than is found in other forms of debt; and some of this sympathy is given in the form of advice that people should not attempt to convert it to the type of credit card debt that results in dealing with collection agencies, like portfolio recovery.
In countries lacking government sponsored healthcare, this kind of bankruptcy is very common. To cover medical costs, patients in such areas as these, may buy health insurance – this is if they have the money. In any case otherwise, they may go without the insurance and take care of the total bill for their costs in medical services. There are those who have health insurance, but may be forced to foot their medical costs, in case the insurance company refuses to.
For example, if an unexpected injury occurs or illness attacks, a person can find it hard to afford all the bills from office visits, surgeries, laboratory testing and prescription drugs; and they are further burdened when they go in to default, and debt collectors, like transworld systems, end up adding on additional fees!
The procedure of the declaration of medical bankruptcy is usually a tediously long drawn-out process. There are other numerous options that somebody can have a look at, at first. There are some places where insurance billing departments and hospitals become lenient, allowing a person/patient to make payments in little portions of the entire bill – over a longer duration of time. This particular person can equally ask for smaller fees, as well as, request for donations from charities, like The Salvation Army!
One can file for bankruptcy in the event that he (or she) has been successively unable to pay or come up with other solutions in which they can pay off the medical debt. A judge does review the debt and the individual’s possessions (or other assets of finance) in order to evaluate whether or not that individual is a good candidate for bankruptcy. This depends on that area or region’s particular laws for bankruptcy. If a bankruptcy judge makes a judgement that the candidate is fits the criteria for bankruptcy, he or she will be exonerated from the responsibilities of paying the full medical bills.
As much as medical bankruptcy can help one reduce the debt amount a person has, there are also possible disadvantages that come with it. One of these disadvantages is that those people who have been legally met the criteria for medical bankrupt, they may not be approved to get a loan (or credit) for several years, later. Moreover, many regions have limitations on the number of times one can be declared bankrupt. This is the reason why it is always advisable to claim medical bankruptcy as the very last resort, as one may have new debts (from collection agencies, like westlake financial services) that may occur afterwards – leaving the consumer with far less legal options to resolve the debt.
Medical debt is a conspicuous phenomenon, nowadays, in the United States of America. People living in less developed countries with low income will usually gravitate towards whichever aid they can get from NGOs (or the state), without having to go into debt. Public coverage of costs for healthcare is most comprehensive in developed nations. However, in the United States, even when a patient is covered by an insurance company, a considerable portion of the medical costs still remain the responsibility of the patient; as stated in the official order known as The Patient Protection and Affordable Care Act coverage of 2010.
A survey conducted in 2007 discovered that almost seventy million Americans have difficulties paying their doctor bills, thus burdening them with more medical debt. Studies also show that people tend to augment their medical debt further, when they lack medical health insurance necessary to get medication, along with the necessary procedures and follow up treatments.