MEDICAL BILLS ARE NOT NECESSARILY THE WORST KIND OF DEBT
Medical bills are an interesting type of bills. Most medical debt is interest free, so long as you communicate with your healthcare providor and make your payments on time. However, the moment you are late in making a payment to your doctor, you get sued. Although the repayment terms are usually the most lenient, the odds of being sued and garnished if you breach those terms is very high. Luckily, all medical debt is completely dischargeable in bankruptcy.
CAN I NEGOTIATE WITH MY MEDICAL DEBT?
It depends on the provider. Smaller clinics are more likely to negotiate a lump sum settlement than a large hospital, for example. At the same time, large hospitals often offer programs, sometimes called "Bridge Assistance" to assist debtors who may not qualify for OHP, but either have crippling medical debt, or other debts that make the medical bill difficult to repay. Many hospitals offer a percentage discount for a lump sum payment, but may not be willing to reduce the amount any other way. This is because they are usually a local provider and are very good at suing you in county court, winning the case, and garnishing you if you don't pay.
BANKRUPTCY ELIMINATES MEDICAL DEBT: The most common reason people have to file bankruptcy is because of a medical emergency. Good, hardworking folks suddenly find themselves with a medical condition or injury, and then are stuck with a high deductible and out of pocket max. Something very simple, such as having a baby, can cost a person as much as $20,000 if they do not have the right medical insurance and their out of pocket max is that high.
Luckily, medical bills are considered "unsecured debt" because the patient did not provide any collateral, such as a car or home, as a condition of receiving medical care. Therefore, medical debt can be completely discharged in a bankruptcy. The day you file your bankruptcy case, the phone calls and creditor harrassment will stop. You do not have to suffer with this debt, and given how unfair the medical system is to everyone, you should not feel bad about filing for bankruptcy to be free of it.
HEALTH SAVINGS ACCOUNTS AND FLEXIBLE SPENDING ACCOUNTS: After you file for bankruptcy, you should think about protecting this new, fresh start that you are about to receive. If you have a low deductible health plan, then you should look into getting a Flexible Spending Account to help you pay for medical bills that you know you will have in the future. If you have a high deductible health plan, then you should look into a Health Savings Account to save up a nest egg of money in case another unexpected medical emergency occurs. Health Savings Accounts are a godsend for those who have high deductibles. They can be opened at nearly any bank or major credit union, and the money you put into the account accrues interest! SELCO Credit Union is a great place to start, as they offer the best interest rates. Plus, the money you put into a Health Savings Account gets rolled over year after year! This means you never lose the money you put in, and it accrues interest! Better still, this money that you contribute is directly deductible from your income on your tax returns. It's better than a tax deduction because it actually reduces your taxable income, before taxes are assessed. Very few people know about these Health Savings Accounts, and they are worth looking into if you have a high deductible health plan. It will allow you to control your medical expenses in the future, it is tax-free, interest-bearing, and completely reversible.
Every situation is different, and you should consult with a lawyer if you think bankruptcy to eliminate your medical bills is right for you.
Contact Andersen Law to schedule a free consultation with our Eugene medical debt and bankruptcy attorney. We can answer your questions and explain your options for dealing with medical debt, garnishment, creditor harrassment and other financial problems. We charge low flat rates for our individual bankruptcy clients.