bankruptcy and medical debt Archives - Page 2 of 2

What to Do if Your Medical Bill Gets Sent to Collections

Posted on June 18, 2019by Admin

Medical debt is an issue that plagues many Americans. It only takes one major medical crisis to set a person back hundreds, even thousands of dollars. According to the Kaiser Family Foundation, one in every three Americans report having difficulty paying their medical bills. As a result, a number of these individuals end up having their medical bills go into collections.

If you are one of the millions of Americans struggling with medical debt, remember you are not alone, and you do have options.

Negotiating a Settlement with Service Provider or Debt Collector.

If the debt has not been officially sent to a third-party debt collector but is being collected by the original service provider, the consumer can often work directly with that company to negotiate either a payment plan or settlement of the debt owed. The same could be said for if the debt has been sent to a third-party debt collector, although the entity contacted to negotiate on the debt will be different. This settlement can be done through three different possible methods including:

Reduced lump sum payment;
Percentage of debt payment;
Payment plans.

A lump sum payment is a common method used so long as the person has enough money to pay a large amount. The debt collector often would rather have some level of payment rather than nothing at all, so they will often take a lump sum payment to close the account, although the amount owed may be slightly less than what is paid. Many times, this method is preferred because the creditor or debt collector would rather receive a large lump sum of money immediately instead of keeping the negative account on the books or having the consumer file for bankruptcy where the debt would be discharged.

While very similar to a lump sum payment, some creditors will accept a specific percentage to pay off the debt, such as 25 to 30 percent, while forgiving the remainder owed. However, this type of settlement depends heavily on the balance. If someone owes a small balance, the percentage the creditor will accept may be much higher than the percentage of a large balance. Additionally, if the person is suffering from a financial hardship, the creditor may be more willing to work with that person on a percentage payment. Also, if there is a strong threat of bankruptcy, the creditor may accept a lower payment rather than get nothing through a bankruptcy discharge.

Many medical providers will work with the account holder on payment plans if they are not able to pay the bill off in full right away. However, these agreements need to be worked out timely and not after missing several payments, causing the account to go into default. Both parties must agree on an amount and the terms of the payment plan.

Get any Agreement in Writing.

Whatever settlement is worked out between the creditor/collector and consumer, it is important that this agreement be documented in writing. Without a firm commitment on the amount agreed upon, the consumer will have nothing to hold the collector to in the event they dispute the arrangement. It also gives the consumer something legally enforceable in the event the agreement falls through.

Payments Made but Still Sent to Collections.

The unfortunate fact is even if the consumer is making payments on the debt, the unpaid balance can still be sent to collections. Ultimately, it is a business decision that is made by the medical provider (i.e. – doctor’s office, hospital or dentist). How they handle the account depends on many factors, including how large the balance is, how much is being paid monthly, and how long it will take to finally pay off the amount owed. For example, if the individual owes $15,000 and is only making $10 per month payments, the provider may ultimately find that this is not going to work and could send the claim to collections, even though the $10 monthly payments are being made. This action can be much harder to accomplish if the parties have a written payment agreement, which is why it is extremely important that the payment arrangement be in writing.

Refusal of a Payment Plan.

It is always possible that a medical provider will refuse a payment plan. They are not legally obligated to work with the customer on a payment arrangement. For the most part, medical providers will work out payment arrangements out of goodwill, but if the person asking for the payment plan has failed several times before, they are not legally obligated to work out an agreement. The same goes for a collection agency. However, collectors do often work on commission, and because of this, they will often accept a payment plan that will pay off the obligation quickly, closing the account, and getting them paid.

How Medical Debt is Handled in Bankruptcy.

In bankruptcy, medical debt is treated the same as credit card debt. Medical bills are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing. Making the decision to file for bankruptcy is never an easy one. It can be difficult to get past some of the myths associated with filing for bankruptcy. Sometimes by waiting, an individual facing a lot of debt can find himself or herself in an even worse situation. Filing for bankruptcy can help protect valuable assets, including your home, car, IRA and social security. It will put an end to wage garnishment and any lawsuit being filed to collect on the debt, thanks to the protections of the automatic stay.

Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

https://www.inquirer.com/health/consumer/challenge-medical-bill-debt-collection-tips-20190610.html

https://www.growingfamilybenefits.com/negotiate-medical-bills-settle/

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Struggling with Medical Debt? You’re Not Alone.

Posted on May 15, 2019by Admin

When someone is going through a medical crisis, the last thing that person needs is additional stress. However, for millions of Americans, insurmountable medical debt is a reality that accompanies their illness or medical condition. The Consumer Financial Protections Bureau reports 72 million Americans struggle to pay off medical debt, as of 2018. In fact, it is one of the leading causes of bankruptcy in the U.S.

According to a recent study by Kaiser Family Foundation and the Los Angeles Times, more than 50 percent of consumers have someone in their household who suffers from some type of chronic medical condition. Dealing with continual medical appointments, medication and monitoring of the condition can take its toll, especially on a family’s finances.

Even more staggering are the statistics reported by the American Cancer Society (ACS). According to their figures, more than 137 million Americans are struggling to pay their medical bills. Falling behind due to a medical condition can happen so quickly and easily. With the cost of medical care in our country, many of these patients end up losing everything they have because of their illness. The ACS data shows that 42 percent of cancer patients end up losing their entire life savings within just two years of treatment.

The ACS study looked at what they classify as high out-of-pocket (OOP) costs for medical care, not just care for the treatment of cancer, by focusing on patients between the ages of 18 and 64. Their study looked at several criteria, including lifestyle modification because of medical costs, temporary loss of employment because of medical treatment, the need to refinance or mortgage the home due to medical bills, permanent loss of employment from medical treatment, and the need to sell the patient’s home just to pay medical bills. Other, more severe measures, included stopping necessary treatment because of the cost, and even considering suicide.

The ACS researchers looked at three different “domains” or areas of hardship, including financial hardship, psychological hardship, and coping behaviors. One-third of those surveyed in the category over the age of 65 reported hardship in at least one of the three areas surveyed of hardship. However, of those who were in the “employed” category, meaning between the ages of 18 and 64, over 50 percent of them reported hardship in at least one of the three categories. Women tended to be the group hit the hardest in these three domains.

An even more disturbing statistic showed that while more than half of those surveyed said they were struggling in one of the three hardship areas, one-fourth of those surveyed reported struggling in two of those domains. Unfortunately, as the cost of healthcare continue to rise, as do the prevalence of chronic medical conditions, this problem is only anticipated to get worse, which is why medical care and quality health insurance continue to be an issue on the forefront of politics.

How is Medical Debt Handled in Bankruptcy?

Related Resources:

https://bigthink.com/politics-current-affairs/health-care

Bankruptcy Law, Credit, Timothy Kingcade Posts

How Long Do Debt Collections Affect Your Credit Report?

Posted on March 14, 2019by Admin

When you are being pursued by debt collectors, the incessant phone calls can make you feel anxious and stressed. The number one piece of advice we give when dealing with creditors is to be honest with them. Never make a promise to pay if you are unable to do so and do not avoid creditors or collection attempts.

A collections action is essentially any type of collection on a debt. Whenever a creditor submits an account to collections, a notification is submitted to the credit reporting agencies. This notification will almost always result in the consumer’s credit score dropping. The more collections that show up on the person’s credit report, the bigger the drop will be. Any type of collections will show up on a credit report, including credit cards, medical bills, loans and mortgages.

Once a collections action is reported, it will stay on a person’s credit report for seven years. The same time period applies for missed or late payments. To put these figures in comparison, a Chapter 7 bankruptcy case will stay on a person’s credit report for ten years and Chapter 13 bankruptcy for seven years.

Credit reports treat debts all in the same manner, so if the collection is for a secured debt, such as a home or car, it will be treated the same way as credit card debt. However, medical debt is treated somewhat differently than other unsecured debt. New rules regarding medical debt have made it more difficult for it to impact your credit score as quickly. The new rule builds additional time between patients and insurance companies to resolve such matters. Up until this point, there was no grace period and medical debt could appear on your credit report as soon as it was reported as an unpaid debt. The three credit reporting agencies now have to wait 180 days before putting an unpaid medical bill onto your credit report.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resource:

https://www.myfico.com/credit-education/faq/negative-reasons/how-long-negative-information-remain-on-credit-report

Debt Relief, Timothy Kingcade Posts

Debt Collections for Furloughed Vets Suspended by VA

Posted on January 24, 2019by Admin

The government shutdown has been a nightmare for many federal employees and those who receive direct government benefits. An estimated 800,000 federal government employees have not been paid during the shutdown. The New York Times reports that the typical government worker has gone without $5,000 in pay so far. Just last week, Trump recalled 46,000 furloughed staffers to work without pay.

One group has been hit particularly hard, and that group includes federal employees and their family members who have debts with the Department of Veterans Affairs. As no end seems to be in sight for the government shutdown, the VA has announced that those affected by the shutdown will be eligible for a temporary suspension of collection activity.

Additionally, any veterans who owes money to the VA based on over-payment of a benefit, including compensation or GI benefits, can also request the VA automatically suspend any collection attempts up to 90 days.

These types of stays of collection actions are normally only available during a bankruptcy automatic stay. The VA has said that veterans who are furloughed employees or family members of a furloughed federal employee can request this suspension of collection activity up until April 1, 2019.

If these individuals are interested in receiving a collection activity suspension, they need to prepare and submit a completed VA Form 5655 (Financial Status Report). This form can be submitted by mail, fax or electronically.

When completing the form, it is important that the individual completes all information fully and accurately. In block 36, indicate that you are a furloughed federal employee or a family member of a furloughed federal employee. Additionally, any veterans who has medical debts can also request a suspension of collection actions.

Click here to learn more.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

When Filing for Bankruptcy is the Best Option for Medical Debt

Posted on November 14, 2018by Admin

It only takes one medical crisis to set you back thousands of dollars. In fact, medical debt is the number one reason people file for bankruptcy. Bankruptcy is a part of the U.S. Constitution built to help people in financial crisis. So how do you know when it’s the right time to file bankruptcy?

The following factors are indicators that you should consider filing for bankruptcy, or at least sit down with an experienced bankruptcy attorney to discuss your options in more detail.

If your debt amount is more than 40 percent of your income. The higher the debt-to-income ratio a person has, the less likely it is he or she will earn enough money to ever pay back the debt;
If you are using debt, such as credit cards or unsecured personal loans, to pay for other debts;
If your debts include items that can be liquidated in bankruptcy, such as medical debt, credit cards or personal loans;
You are using payday loans to help cover necessities before your next paycheck. This is oftentimes a sign your expenses are exceeding your income;
If you are forgoing necessities such as healthcare, prescriptions, or food;
If the collection calls have reached a breaking point;
If you have been threatened with a lawsuit, are being sued by a creditor or your wages are being garnished.

How is Medical Debt Handled in Bankruptcy?

In bankruptcy, medical debt is treated the same as credit card debt. Medical bills are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing. Making the decision to file for bankruptcy is never an easy one. It can be difficult to get past some of the myths associated with filing for bankruptcy. Sometimes by waiting, an individual facing a lot of debt can find himself or herself in an even worse situation. Filing for bankruptcy can help protect valuable assets, including your home, pension, IRA and social security. It will put an end to wage garnishment and any lawsuit being filed to collect on the debt, thanks to the protections of the automatic stay.