Medical debt can quickly become a nightmare, especially if you don’t have health insurance. Sometimes filing for bankruptcy can help if your medical debt is so much that you can’t afford to pay it.
Two years ago, Tracy ended up in the emergency room of her local hospital after falling off a ladder when she was painting her kitchen. She had broken two ribs. She didn’t have health insurance, but figured the cost wouldn’t be astronomically high – she and her husband would figure out a way to pay it off. Life happens, right?
She didn’t expect the bills to run over $25,000.00. She filed for state-funded Medicaid, but was told her husband makes too much money for her to qualify. She filed for the local hospital’s “Charity Care” program, but was told the same – she didn’t qualify because she and her husband make “too much money.”
Tracy’s husband manages a restaurant. He makes just under $60,000 per year. Tracy stays home with their baby daughter. After their $1,300 per month mortgage payment, 2 car payments, car insurance costs, utility bills, and she and her husband’s maxed-out credit card bills, there’s barely enough money left at the end of the month to buy food. Tracy couldn’t believe these people were telling her they make “too much money.”
Tracy consulted with a lawyer she knew to try and get the hospital to forgive the debt. Her lawyer pleaded with the billing company, asking them to consider the fact that they just didn’t have enough money to even make small payments toward the $25,000 medical debt. The hospital refused to make any accommodations. Tracy refused to pay a dime toward the debt because she felt they should understand her situation. But the bills kept coming, and eventually, she started getting calls and letters from collection agencies. Because the debt had gone to collection, her personal credit score was now trashed. She had been responsible for her entire life, now because of some inflated medical costs she couldn’t afford, everything she had worked for was in question.
Tracy called an NJ bankruptcy lawyer and learned that if she filed for bankruptcy, she could get ALL of the medical debt and her credit card debt forgiven at the end of the bankruptcy program. Her lawyer worked with her to come up with a plan, based on her household income, so that she can continue to make her car and mortgage payments on time, and still afford to buy food and pay her utilities. She stopped paying her unsecured debt (medical and credit card debt), and at the end of the bankruptcy plan, the $25,000.00 medical costs and her credit card bills were dismissed.
What had been a nightmare was finally resolved. Tracy could get back to living a normal life. Filing for bankruptcy isn’t a quick fix and isn’t supposed to be overused, but in Tracy’s case, it was a valid solution to her problems.