A Cure for Your Debt Problems: Discharging Medical Debt
Unpaid medical debt is one of the leading causes of bankruptcy. Many Minnesotans have lost their jobs and cannot afford health insurance. Even those who have insurance commonly incur huge co-payments from a major illness or accident where the cost of medical care exceeds insurance coverage.
If you are buried by medical debt, you will be able to discharge medical bills outright or repay them over time through bankruptcy. The timing and other important considerations demand careful handling by an experienced lawyer. Hoglund, Chwialkowski & Mrozik, PLLC, has filed thousands of cases in Minnesota, including cases for people seeking relief from medical bills.
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Minnesota Bankruptcy and Medical Bills Lawyers
Most people have co-pay coverage through an employer that pays 80 percent or more of medical costs. But if you, your spouse or your child suffers a catastrophic event or serious health problems, that 20 percent out-of-pocket co-payment can rapidly add up to tens of thousands of dollars. If treatment isn’t covered or you don’t have insurance, the medical bills can become impossible to pay.
Medical bills are unsecured debt, as opposed to a loan or debt that is secured by collateral. Thus medical bills can be discharged completely in a Chapter 7 bankruptcy. There is no limit to the amount of medical debt that can be discharged.
If you are not a candidate for Chapter 7 (due to high income, mortgage arrears or non-exempt assets, for example), Chapter 13 bankruptcy still provides a reprieve from creditors. At the end of your repayment plan, any remaining medical bills and unsecured debts are discharged.
The timing of a bankruptcy filing can matter. Any medical debt incurred after the petition is filed cannot be included in the discharge. The filing should be delayed as long as possible if you expect to incur a substantial amount of additional medical expenses due to ongoing medical treatment.
Common Questions About Bankruptcy and Medical Debt
- Will my health insurance be affected by bankruptcy? No. A bankruptcy will not change how your health plan covers medical expenses. You are still obligated for any premiums, unmet deductibles or co-pays. After your insurance has paid the maximum under your policy limits, you can discharge the unpaid portion in a bankruptcy case.
- Do I have to list all of my medical debt? Yes. You cannot pick and choose which debts are included in your bankruptcy.
- What if I want to keep my same doctors? Patients often want to keep seeing the same physicians after bankruptcy. You must list all medical debts, but you voluntarily can continue to make payments to your doctors and medical providers. Most hospitals and clinics are accustomed to dealing with discharged debts, and thus those providers may be willing to work out payment arrangements for ongoing or future services after a bankruptcy.
- Am I responsible for my spouse’s medical bills if he/she does not file for bankruptcy? Yes. Under Minnesota law, spouses can be held responsible for each other’s medical debt. Our attorneys can explain the pros and cons of filing for bankruptcy jointly versus one spouse filing as an individual.
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If you cannot hope to repay medical bills or if you are now facing foreclosure, garnishment or other legal action because of medical debt, Hoglund, Chwialkowski & Mrozik can help. Our Minnesota medical debt relief lawyers can help you make the right decisions and file your petition at the right time to get the maximum benefit. Contact us today for a free consultation.