Filing Bankruptcy Due to Medical Bills
In a medical emergency, the last thing you worry about is paying the bills, as getting better is the top priority. However, medical bills can quickly pile up and significantly dent your financial well-being. You might wonder if declaring bankruptcy on an overwhelming medical bill can be possible. Let’s have a closer look.
Medical Bills Bankruptcy Guide in Australia
While solely applying for bankruptcy because you can’t pay the bills might not be an option, some bankruptcies occur due to medical debt. Many individuals struggle to pay the cost of healthcare and get burdened by overwhelming bills. Remember to access the refunds/offsets offered under Medicare and your Private Health Cover (if held), as this could substantially reduce out-of-pocket expenses.
The Australian Financial Security Authority states that around 10% of bankruptcies are linked to medical bill issues. Although health insurance covers various medical treatments, private and dental hospital surgeries are usually not included in the list. These can result in higher medical care costs that create major financial issues for people, who often end up declaring bankruptcy.
Should I File Bankruptcy for Medical Bills?
While bankruptcy caused by medical bills is possible, it can be daunting and may not be the best option. We recommend discussing with one of our experts before you make any decisions. Fortunately, there are ways you can avoid going bankrupt. Here are some tips to help you:
Never Ignore Your Medical Bills
Medical bills can impact your credit score, just like other bills. If you neglect to pay your medical bill, it can drastically reduce your credit score. It is wiser to inform the hospital, insurer, or healthcare provider that there will be a delay in the payment or ask them if you can follow a payment plan.
Even making a small medical bill payment is much better than completely ignoring your bill, as it maintains a better relationship with the recipient. If you don’t have sufficient funds to make the payment, ask about any financial assistance programs that can help you.
Try Negotiating a Lower Rate
It might seem daunting, but negotiating the rate can be worth a try. You can call the billing office and inquire whether they can accept a lower rate. You might hear “no,” but you can still try to be persistent. Sometimes, they can even offer you other options to help with the payment.
Don’t Use Your Credit Cards.
Credit cards can undoubtedly lead you to bankruptcy if you are not careful. It is always wiser to avoid using credit cards unless you are sure you can immediately pay them back. Medical bills are extremely high, and the amount can keep increasing if you neglect paying back the credit card bill. Try to work out a payment plan with the hospital. Pay a small percentage of the bill and request them to allow you to make the remaining payment later.
Other Options Instead of Filing Bankruptcy on Medical Bills
Here are some of the options that can help you in paying your medical bill debts and avoid bankruptcy:
Apply for Financial Assistance
Various hospitals provide financial assistance programs to people who cannot pay overwhelming medical bills. If you are uninsured, unemployed, or need additional financial help to pay the bills, ask the hospital about their financial assistance aid.
Take Out a Bank Loan
Getting a bank loan to pay medical bills is a reliable way to pay the medical bills, but you would have to apply and qualify to get the loan, which can take time.
Ways to Manage Medical Bills Bankruptcy
If nothing else works and the only way out is bankruptcy, you must start focusing on rebuilding your credit after declaring medical bankruptcy. Here are a few ways you can manage your bankruptcy and improve your credit:
Ensure Ongoing Debts Are Paid in Time
Even though your medical debt would be discharged because of the bankruptcy, you might still have other loans that aren’t covered under the bankruptcy. It is crucial to make efforts to pay the remaining ongoing debts in time. It is a great way to rebuild your credit.
Use Other Types of Credit
Using different kinds of credit might be challenging. This can be in the form of new loans or other credit cards. However, use extreme caution if looking to borrow with ‘payday lenders’ who generally are more liberal with their lending but charge very high-interest rates.
Need more information about bankruptcy? Contact Us.
“Bankruptcy due to medical bills can be challenging to manage. However, it can be an option, and we have helped people in the past use this method to remove outstanding medical debt; see our case study on the topic. Getting in touch with one of our bankruptcy professionals to help you through the process and give you valuable tips to recover from Medical Bills Bankruptcy is essential.”
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