Bankruptcy Lawyer Jackson NJ. Can I file bankruptcy for medical bills that I cannot afford? The answer to this question, just as with any legal question, starts with “it depends”.
If depends if have good credit and want to preserve it, if you can afford to pay the medical bills with some type of assistance and if you will qualify for Chapter 7 or 13 bankruptcy.
Lets start with your credit. If you are not paying your medical bills for more than 90 days, you will likely result with a collection agency. That agency may start reporting to the credit reporting agencies that you are delinquent on your medical bills. If you don’t settle the debt the medical provider or collection agency you may even get sued and a have a judgment placed against you. None of the above is good for your credit and will take an excellent to good credit score down to a poor one rather quickly. Even worse with if faced with a judgment you are now open to wage garnishment or other collection procedures.
There are options to deal with medical bills and preserve your good credit.
With a skilled Attorney you can workout a settlement with the medical creditor.
If you are insured make sure to coordinate with your provider so that available insurance coverage is applied. If you are uninsured then explore options such as charity care. Hospitals are required to submit all claims for charity care should your qualify. This may result in the medical provider waiving a percentage of the bill. Many hospitals and other medical providers routinely waive or discount bills for patients who are uninsured.
For example, New Jersey’s Hospital Care Payment Assistance Program (HCPAP) mandates free or reduced-charge care to qualifying patients who receive necessary inpatient and outpatient services at acute care hospitals in NJ.
In addition, under the Hospital Care Assurance Program (HCAP), you may qualify for free or reduced hospital care, depending on your level of income. If you qualify, HCAP will partially or wholly cover expenses for medically necessary services. You should contact your hospital’s financial aid counselor to find out more information and apply for HCAP coverage.
Affordable Care Act (commonly referred to as Obamacare)
Most hospitals now operate as tax-exempt entities and in return provide free or low cost care. The ACA added Section 501(r) to the Internal Revenue Code, which contains four new requirements related to community benefits that nonprofit hospitals must meet to qualify for 501(c)(3) tax-exempt status. They are as follows:
• Conducting a community health needs assessment with an accompanying implementation strategy;
• Establishing a written financial assistance policy for medically necessary and emergency care;
• Complying with specified limitations on hospital charges for those eligible for financial assistance; and
• Complying with specified billing and collections requirements.
What this means to you is that each of these nonprofit hospitals must have in place a financial assistance policy that contains basic information on how to apply and what criteria they will accept. In addition, there must be a separate policy that states that the hospital will provide emergency medical care to all individuals, regardless of whether they qualify for financial assistance.
It means that there are limitations on hospital charges for financial assistance policy–eligible patients
needing emergency or medically necessary care, nonprofit hospitals may charge only the amounts generally billed to insured patients for the same services. The amount generally billed may be the Medicare fee-for service amount, the Medicaid amount, or a combination of Medicare and private insurance averages.
It means that these nonprofit hospitals must have billing and collection practices that are fair. Nonprofit hospitals may not engage in extraordinary collection actions before making a reasonable effort to determine if the patient is eligible for assistance under the hospital’s financial assistance policy.
Discharging your medical bills in bankruptcy.
If you are unable to settle your debt or qualify for financial assistance then your delinquent accounts will begin to how up on your credit report. And if the provider sues you and gets a judgment, it can garnish your wages or take other collection action. At this point bankruptcy may be a good option to eliminate the debt.
If your income is not more than chapter 7 allows and have assets with little or no equity, then a Chapter 7 bankruptcy may be the right fit. You don’t need to have a certain amount of debt to file for a chapter 7 and I have had clients file Chapter 7 on a single, but substantial, debt. A medical bill or bills will vanish in Chapter 7 bankruptcy.