Most people want to take responsibility for their financial obligations. Sometimes, financial obligations accrue rapidly with little forewarning, making their management more of a challenge. People battling cancer or receiving emergency medical care after a car crash may incur tens of thousands of dollars in medical debt with little advance warning.
Those with large debts owed to hospitals and other health care providers might hope to work out payment arrangements. They may expect their medical creditors to be cooperative and somewhat forgiving. Medical creditors are actually quite aggressive in the pursuit of repayment.
Those dealing with high levels of medical debt and aggressive creditors may need to explore personal bankruptcy as a solution to avoid devastating consequences.
Medical creditors frequently file lawsuits
Contrary to the popular perception of health care providers as forgiving and compassionate, the reality is that most medical businesses focus more on profits than on patients. Even nonprofit hospitals are often aggressive about collection efforts.
According to research conducted by Duke University School of Law researchers, medical creditors filed lawsuits against 7,517 patients or their family members in North Carolina between January 2017 and June 2022. Medical debt lawsuits lead to judgments that can produce wage garnishments or liens against valuable property.
Unfortunately, even when medical hardship explains why an individual hasn’t fully repaid their care costs, the courts typically side with medical creditors in litigation scenarios. So long as the creditor can validate the debt, the patient is at risk of a judgment in favor of the creditor and lasting financial complications.
How does bankruptcy help?
Bankruptcy filed in response to a medical creditor’s pending lawsuit can provide immediate relief for the debtor. The automatic stay granted in a bankruptcy filing prevents continued collection activity until the courts respond to the case.
Automatic stay protections generally require that creditors dismiss pending lawsuits until the courts resolve the bankruptcy or lift the automatic stay. Individuals with substantial medical debts can frequently discharge what they owe if they act before the courts grant a judgment to their medical creditors.
Individuals struggling to make payments on their medical debts or served with paperwork for a lawsuit by a hospital or other medical creditor may need to act swiftly to pursue relief through bankruptcy. Filing for bankruptcy can give people an opportunity to evaluate their options and may eliminate medical debts causing financial challenges.
