The costs involved in medical care and treatment can be staggering, especially for a cancer patient. If he or she is being treated with chemotherapy, the average cost of just the first treatment is about $7,000. Depending on the drug, the stage of the cancer and individual factors involving the specific patient, a two month course of chemotherapy alone can easily cost $50,000 or more. Then there are the other bills attendant to the treatment, including the oncologist and the hospital or clinic.
About 60 percent of all bankruptcies
A major accident or the diagnosis of a serious medical condition can financially flatten most people. That’s why medical bills are the most common reason for bankruptcy filings. They account for about 60 percent of all personal bankruptcies. Even patients with insurance will be confronted with medical bill balances that they just can’t manage.
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Your medical bills aren’t secured by anything. They’re not like a vehicle loan that’s secured by a motor vehicle or a mortgage that’s secured by a home. Medical bills are classified as unsecured debt. Unsecured debt can be either completely eliminated through a Chapter 7 bankruptcy, or it can be dramatically reduced with a Chapter 13 bankruptcy.
Unsecured bills and Chapter 7 bankruptcy
It doesn’t matter whether you’ve been sued before filing for bankruptcy or whether a judgment was taken against you. Chapter 7 bankruptcy relief is even available if your wages are being garnished. All of your medical bills and other unsecured debt like credit cards or personal debt may be completely eliminated, and if you’re discharged, you can start over again financially.
The bankruptcy stay
You don’t have to be discharged in bankruptcy to have your unsecured creditors like medical providers stopped in their tracks from pursuing you. As soon as your bankruptcy petition is filed, an automatic stay of collection action results, and unless otherwise notified, your cancer treatment medical creditors are prohibited from taking any further collection action. If you’re discharged in a Chapter 7 bankruptcy, it’s highly likely that those bills will be completely wiped out.
Chapter 13 bankruptcy
If you’ve been financially devastated by medical bills from cancer treatment, and you own a home, Chapter 13 bankruptcy relief might be an attractive alternative for you. You’ll be required to pay a percentage of your medical bills and other bills, and you should be able to keep your home too if you continue to pay your mortgage. Your payments will be made to a trustee in bankruptcy who will administer over your debts and creditors during the repayment term. The repayment plan stretches out for a period of three to five years. Most people who petition for Chapter 13 relief due to medical bills end up paying only a portion of the bills. At the end of the repayment plan, other medical bills are discharged.
The means test
Most medical bill bankruptcy filings are pursuant to Chapter 7. Petitioners under Chapter 7 must show that their income is low enough to qualify for its relief through a means test. The bottom line on that means test is whether your monthly income is less than the median income for a household that’s the same size as your household in California. If the means test puts you above that amount, you can still be a suitable candidate for Chapter 13 relief.
Feel free to contact us, and we can discuss whether filing for bankruptcy is the right choice for you. If it is, our office will guide you through the entire process, and you can start working on getting your life and finances back in order right away.
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Elena Steers is a highly experienced bankruptcy attorney, the founder of Law Offices of Steers & Associates, and previously worked as a Bankruptcy Trustee Assistant at the Office of the Chapter 13 Trustee in Los Angeles. Her current affiliations include the State Bar of California, National Association of Consumer Bankruptcy Attorneys, and Central District Consumer Bankruptcy Attorneys Association.