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 Dear
Bankruptcy Adviser,
I have a question about bankruptcy caused by medical conditions. I'm currently undergoing cancer treatments and with this comes a continuous delivery of bills (which are not covered by insurance). Should bankruptcy proceedings be initiated now, before any judgments are forthcoming, or wait until all billing(s) have been established?
-- Mike
 Dear
Mike,
It's a good question. This is an issue faced by
many people who are under financial pressure due
to ongoing health concerns. You need to get out
from under your debt, but you still face more
medical debt.
The goal is for you to recover your physical health, be able to work and rebuild your financial health as well. To do this, you're going to need to push the limits of the system. You'll be getting lots of calls from collection agencies. You'll need to file bankruptcy to eliminate debt from certain medical providers -- and yet, you'll be relying on these same providers to give you medical care down the road. And you'll be undergoing cancer treatments. This won't be easy.
One classic error people make is including all of their medical
practitioners in the petition and then choosing
to work with (and pay) only some prior to filing
bankruptcy. This is known as a "preference."
It means you are agreeing to pay one creditor
without consideration for the others. Now, you
are allowed to pay anyone you want after you file
your case, because only prefiling payments are
considered preferential. Therefore, if you will
require some medical providers over others due
to your specific condition, then you can make
arrangements with those providers after the bankruptcy.
At the same time, you may still need some health service providers more than others. You and an attorney in your area will need to discuss how best to handle your ongoing medical situation.
In your situation, Mike, it may seem strange to spend the money to hire an attorney, but I think it would be well worth it. Unless you have the means to pay back all your debt over the next four to six years, you will be burdened by judgments, which will result in wage garnishments, bank levies or both.
First, an attorney will field all
of the collections calls and may be able to insulate
you from the harassment. Second, the particulars
of filing bankruptcy when you have a health issue
can be complicated, and it's worth getting expert
advice from the beginning to save yourself time,
energy and money. Finally, if you choose someone
you trust, you'll have a valuable ally you can
count on if anything challenging crops up in your
case -- and who will keep your confidentiality.
Something else you might deal with, Mike, are the opinions of those around you. When you file bankruptcy in this way, there are many people who think, "Ugh. When anyone files bankruptcy over medical bills, my health insurance goes up." This is true, so let me say something on this matter.
No one likes his or her insurance
costs to go up. No one likes prices to rise for
any reason. In the long term, however, what's
best for everyone's finances (and health insurance
costs) is a healthy population. This is why there
are people in favor of national health care. This
is also why the best course of action, Mike, is
to use your rights under the bankruptcy laws and
do what it takes to protect your health.
I'm lucky to be healthy right now. For me, I'll gladly pay a little more each month so that people like you can continue with your treatment. In the long run, it's the best thing for all of us. It's also the right thing to do.
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