The Growing Burden of Medical Debt
Medical debt is a leading cause of financial distress and a significant contributor to bankruptcy filings. Unlike credit card or personal loan debt, medical bills often arise unexpectedly due to illness, injury, or emergency procedures. When unpaid, this debt can quickly spiral out of control, leading to collection actions, credit damage, and legal judgments.
How Medical Debt Impacts Credit Reports
While medical debt isn’t reported to credit agencies immediately, it can severely impact your credit score over time:
- Delinquency Period:
- Medical providers typically give patients several months to pay before turning the debt over to a collection agency.
- Collections Reporting:
- Once in collections, the debt is reported to credit agencies, becoming a blemish on your credit report.
- It remains on your report for up to seven years, even if paid in full.
- Financial Consequences:
- A collections account can lower your credit score, making it harder to qualify for loans, mortgages, or favorable interest rates.
- Legal Actions:
- Unpaid medical debts are often referred to attorneys who may seek judgments against you.
- Judgments allow creditors to garnish wages or seize bank accounts, exacerbating financial struggles.
Marriage and Medical Debt: The Doctrine of Necessities
Medical debt doesn’t just affect individuals—it can have serious implications for married couples:
- Shared Responsibility:
- States like Kansas and Missouri follow the Doctrine of Necessities, which holds both spouses liable for medical debts incurred during the marriage.
- Example: If one spouse undergoes surgery, the other may be equally responsible for the portion of the bill not covered by insurance.
- Financial Strain:
- Unexpected medical costs can upend a household’s budget, leading to missed payments on rent, mortgages, or car loans.
Bankruptcy and Medical Debt Relief
If medical bills have become unmanageable, bankruptcy may offer a solution:
Medical Debt in Bankruptcy
- Medical debt is dischargeable in both Chapter 7 and Chapter 13 bankruptcies.
- This means you can eliminate medical bills along with other unsecured debts such as credit card balances and payday loans.
Chapter 7 Bankruptcy
- Provides a fresh start by discharging qualifying debts.
- Ideal for individuals with lower household income and few assets.
Chapter 13 Bankruptcy
- Creates a repayment plan, allowing you to pay back a portion of your debt over three to five years.
- Protects your assets while addressing both medical and other debts.
Take Control of Your Finances
If medical debt is overwhelming you and affecting your marriage or household finances, bankruptcy can provide the relief you need. By addressing all unsecured debts in one case, you can:
- Stop creditor harassment.
- Prevent wage garnishment or bank account seizures.
- Regain financial stability.
Contact Us Today
Medical debt shouldn’t control your life. Whether you’re dealing with mounting bills, shared liability with a spouse, or judgments, we’re here to help. Our experienced Kansas City bankruptcy attorneys can guide you through the process and help you achieve a fresh financial start.
