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Medical Bankruptcy is not a legal term — but it is a very real and devastating situation

Families in financial stress due to the bills resulting from an illness or injury often think of themselves as facing “medical bankruptcy.”  Under the law there is no such term, however, for those who are over their heads in debt because they are not able to pay medical bills, this is a very real situation.

“Even families with good health insurance can be devastated financially by a serious disease due to co-pays for treatment and medications, and other uncovered medical expenses,” said Jeffrey Freedman, Managing Partner, Jeffrey Freedman Attorneys, PLLC.

Medical facilities can be very aggressive about collecting debts — convincing patients and families to put the debt on credit cards, go through special lenders such as Care Credit, or take out home equity loans. Also, a number of medical services have to be paid in advance which means the expense often ends up on a credit card or line of credit.  By the time the debtor reaches bankruptcy court, the debts are not readily identified as related to the illness.

“When a loved one’s life is at stake, people borrow against their credit cards, their homes and from their families — the focus is on the illness, not the debt” Freedman said. “Then when the debt becomes completely unmanageable, bankruptcy is the last resort.  These clients are normally very responsible with their finances. They are often ashamed to have to turn to bankruptcy.”

Financial stress can trigger more illness and other disruptions in a family’s life, so getting the debt under control and obtaining a fresh start is the best possible option.

“Anyone who has gone into debt due to an illness or injury should consult a consumer bankruptcy attorney.  Many of these debts can be discharged in a bankruptcy.  The family should not have to undergo any more trauma than they have already,” Freedman said.