Many people who end up struggling with debt have previously been very responsible about their spending and use of credit. All it takes is a single medical emergency to cause financial devastation. A heart attack while on vacation might lead to thousands of dollars in out-of-network medical care costs, for example. Those in need of surgery or cancer treatment may require care that their insurance companies do not fully cover.
Overwhelming medical debt has become one of the top reasons for personal bankruptcy. When is the right time for those with concerning levels of medical debt to initiate a bankruptcy filing to address those debts?
Before debt-related litigation
As soon as a patient receives legal service for a debt-related lawsuit, they may want to take prompt action to protect themselves. The automatic stay granted when a person files for bankruptcy can immediately halt collection activities. Creditors typically even need to dismiss pending lawsuits.
Instead of waiting to go to court in the hopes of convincing a judge not to issue a judgment in favor of a medical creditor, the best response to a medical debt lawsuit is often to file for personal bankruptcy. Litigation is how medical creditors secure liens against a former patient’s home or how they obtain the right to garnish their wages.
Both of those acts can significantly worsen an individual’s financial challenges. A prompt bankruptcy filing can prevent a lawsuit from going to court, thereby protecting the filer from the consequences of a judgment in favor of their medical creditors.
Those feeling overwhelmed by medical debts may need help evaluating their debt relief options, including a personal bankruptcy filing. Reviewing medical invoices with a bankruptcy lawyer can help people understand their options and choose the ideal time to file for personal bankruptcy.
