5 money jams bankruptcy can fix

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Even if you are overwhelmed by medical bills due to injury or illness, try to avoid bankruptcy by exploring all other avenues for paying off your debts, says attorney Howard Ehrenberg of the Los Angeles-based firm SulmeyerKupetz.

"Certainly, the individual should make every effort to negotiate directly with the doctor, hospital or provider," Ehrenberg says. "Frequently, arrangements can be made to reduce the amount owed and to stretch out the payments."

However, in some cases, it may be prudent to contact a lawyer and consider bankruptcy as a practical solution to debt problems.

"If all else fails, bankruptcy is a legitimate way to eliminate those debts," Ehrenberg says.

Herman says even relatively minor medical events can trigger overwhelming medical bills, and that hospitals are unlikely to wholly or partially forgive debts other than in "exceptional cases."

"Medical bills are unsecured debts, but often hospitals are well-represented and won't hesitate to sue on unpaid medical bills," Herman says. "When facing medical bills that are far beyond the capability of an individual to ever pay -- or this has turned into a lawsuit or garnishment -- a Chapter 7 liquidation bankruptcy is usually the best method to discharge this debt."




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