Debt is, unfortunately, a part of everyday life for many people. If you ever want to buy a house, for example, chances are you won’t be able to buy the house with cash. Instead, you’ll have to go into debt to buy the house. This is a common issue in many situations, including medical situations. When you aren’t able to pay off your debt, you may end up having to resort to bankruptcy.
Bankruptcy is a term you’ve almost certainly heard before, but you might not know much about it. Medical bankruptcy especially is rising as medical bills on average are becoming more expensive to navigate and significantly more difficult to pay. Medical bankruptcy is something that’s becoming a reality for more and more people every year.
A medical bankruptcy happens when someone is unable to pay off medical expenses specifically and cites medical costs as being the main reason for their bankruptcy. In the eyes of the law, medical bankruptcy is not really any different than any other bankruptcy; either way, you’ll still file the bankruptcy the same. However, medical bankruptcies are rising as the cost of medical care is rising as well, leading to more bankruptcies.
The reasons as to why someone might declare medical bankruptcy are many. Of course, they’re all going to have to do with medical bills in one way or another, but the ways in which medical expenses pile up can vary tremendously. Medical bankruptcy reasons include:
Essentially, medical bills can either be the main player in the bankruptcy or they can be a side player that just happens to increase debt so much that an individual is unable to manage all of their debts. No matter what these medical bills end up being, bankruptcy can help a person reduce their bills in general.
A bankruptcy, of course, will always significantly impact debt collection, but it’s possibly even more impactful when it comes to medical bankruptcy. That’s because different kinds of debt are treated differently in bankruptcy. This is why debt collectors for different industries may need to tailor their work for that specific industry.
Medical debt is considered a “nonpriority general unsecured debt” in a bankruptcy. Essentially, they go to the bottom of the pack in terms of priority for repayment, which means if there are any other debts the individual has, it’s very unlikely that the medical debt will end up being repaid. When an account goes into bankruptcy, medical debt collectors may just remove them from their records.
Ideally, you should receive contact from the delinquent account once the bankruptcy is in the filing stage, but especially if you bought the medical debt from another organization, you might not get that information. Enformion can help you identify whether someone has recently filed for bankruptcy, which can help you remove them from your lists for priority contact.