Before we discuss what medical bankruptcy is, let us define the term “bankruptcy”. Bankruptcy is the legal declaration where a person or a business is incapable of paying debts. In reality, there is no such term as “medical bankruptcy”, only now are those words surging in the medical field to describe a state of a person who faces unresolved debt due to medical reasons. In other words, medical bankruptcy is a condition of financial deficit due to medical bills. This becomes true when the person cannot afford fees for consultation, exams, medicines, treatment and other procedures. In addition, a person is considered “medically bankrupt” if they have spent a quarter of their yearly income on medical debts and have left work without pay for at least a month.

What Happens in Medical Bankruptcy?

Such term is more familiar to countries that get no support from the government on health care services. A specific example of what is medical bankruptcy in countries is the United States’ current health care system. Perhaps, the United States is the only well-developed country that does not offer universal health care to its people. Compared to underdeveloped countries like Philippines, where people are supported by health insurances. Although few Americans are medically insured, they are still unsecured as medical prescriptions and services may not be entirely covered. So in fact, medical bankruptcy is a kind of personal debt which millions of American suffer from. In a worst case scenario, a person may lose their job due to medical bankruptcy. The situation results to greater problems such as the individual decides not to seek for medical treatment to avoid further medical debts.

What is the Medical Bankruptcy Procedure?

The government declaration of medical bankruptcy is not absolute and varies from country to country. Oftentimes the common scenario in hospitals is that the person pays the medical bills over an extended period of time. Otherwise if it is impossible, the person may file for medical bankruptcy. During the process, a judge will evaluate the person’s debts, assets and properties with reference to the medical bankruptcy rules. The bankruptcy attorney or lawyer will present dissertations in behalf of the client. If the person is eligible for bankruptcy, he will be freed from paying the debts. That is to say that debits are expected to reduce in value.

What are the Cons of Medical Bankruptcy?

Provided that you are eligible for insolvency, the aftermath of medical bankruptcy is not better after all. A person who has filed for medical bankruptcy may find it hard to get their loans approved, as a bankruptcy can affect your credit score for up to 10 years! Although, this improves if monthly repayments are made on time. While bankruptcy rules and laws offer reparation for medical bills, it will still cost you a lot more over time with all the interests levied. Another con of filing medical bankruptcy is the loss of your properties or assets. If credits or payments are insufficient, your assets will be distributed. This means a detriment to your cars, house etc.

There are still a lot of facts you should know about medical bankruptcy. The Chapter 13 and Chapter 17 explain the rest of bankruptcy rules, laws and other relating matters. I hope this article explains the basics of what medical bankruptcy is.