Has anybody had to declare bankruptcy due to medical bills?

[napi21]

My cousin is blind, had a pancreas transplant 9 years ago, had his own professional business but is only able to work 2-3 days a week now, and has been on SSDI. Transplant patients require lots of medicines, and some recent problems have generated even more debt. I spoke to him last night and they are talking about having to declare bankruptcy. The only option they've had was to put the cost of the expenses on a credit card, and although they're surviving, debt is getting deeper & deeper. They were obviously asking me for advice, and I don't know what to tell them. I can see the bankruptcy option working for one hugh debt due to one medical emergency, but this one is not one emergency...it's ongoing expenses. The way I see it, they could declare bankruptcy today, and lose their credit cards, so even when the past debt is gone, how would they handle the expenses that will continue?

I checked all the different forums, and this one seemed to be closest to my topic. If it doesn't belong here, please delete.

[babylonsister]

1. This has happened to a whole lot of people.

I don't know about folks on DU, but google bankruptcy + medical. I got about 661,000 hits, and do recall reading of this often. It's tragic and it's happening.

[Donnachaidh]

2. Has he contacted his county for help with the medical stuff?

I know he probably thinks he's automatically not eligible for help because he's a business owner, but if his receipts have dwindled and his medical costs have been rising, he may very well be eligible for help with the medical.

While we weren't completely broke, we went to the County offices yesterday. We're in Georgia, and while I was talking to the accessor, I found out that we are eligible for Medicaid, and may even have help with other stuff. And there were a LOT of folks there that seemed like us - never thought they would have to get help, but were there because of the economic collapse, and were finding they were eligible for some help.

I'd check all those outlets before declaring bankruptcy. My opinion, ymmv.

Good luck to them. My heart goes out to everyone who is getting nailed in this mess.

[madrchsod]

3. i did years ago and may this year

they need to see a good bankruptcy lawyer as soon as possible. since this is an on going situation and he owns his own business they will have to consult an attorney on all the legal issues involved here.


my problems were the amount my insurance did`t pay the hospital and i`m refusing to pay for an second operation caused a staph infection i received during an operation.

[fasttense]

4. I have a friend who had a small business who

had no health insurance (due to preexisting heart condition). He had a heart attack and lost his home, his business, everything. He lives in his sister's basement and is now an employee in the business he once owned.

Medical bills is the single largest cause of bankruptcy today.

[happyslug]

5. What State is he in?

Remember just because he owes money does NOT mean he has to declare Bankruptcy. First he is on SSDI, so if the Medical providers sue him and get a Judgment against him, they can NOT touch his bank account as long as the only money going into it is SSDI. Basically Social Security can NOT be touch even in a Bank Account.

I live and work in Pennsylvania, one of only two states in the Union that prohibits Attachment of Wages (Texas being the other one), but once the paycheck goes into a bank account the creditors can attach it IF THEY HOLD A VALID JUDGMENT. Until a judgment is entered no one can attach any wages or do anything to collect on this debt (The sole exception is if someone has a lien on a piece of personal property, like your car, that can be taken by the lien holder if you fall behind, note only by the lien-holder or his agent such as any repo man).

Now once a Judgment is entered (I.e. a Complaint filed, and either Judgment is entered by Default or you lose at trial) then and only then can a general Creditor do anything about collecting on that Judgment. Since his income is only SSDI, the only way the Creditor can collect on this Judgment is to do an "Execution Sale" (what most people call a Sheriff's sale) of his property. This varies from state to state, again I will refer to PA. Personal property Execution sale (Everything BUT real estate) is done by the Sheriff (or a Constable if the Judgment had been entered by what we in Pennsylvania call a "Magistrate District Judge" i.e. what used to be called a "Justice of the Peace" prior to the 1960s). The officer goes to the home of the Debtor and "tags" everything ("tags" can be just a simple list of what is in the house). The Debtor can then object to the tagging, if he does NOT object OR the Sheriff (Or Magistrate District Judge) rules against him the property will be sold.

PA only exempts $300 and personal clothing from execution sale, but also prohibits the sale of Marital property for the debt of one Spouse. Thus if your cousin in married and living with his wife AND the wife had NOT been sued, the debt is noncollectable for it is all marital property and you can NOT sell marital property for the debt of one spouse.

Now, we are dealing with Medical Bills, and the Medical provider can sue the spouse under the theory that the spouse has a duty to provide necessities for the indebted spouse. Thus the Medical provider may have a claim against both spouses, but if only one spouse is sued, they are out of luck.

Again, I must emphasis that exemptions vary from state to state. Pennsylvania had no attachment of Wages, but the lowest exemption from execution sale in the Country. If I knew what state he lived in and if he owned his home and if he has a spouse, I could give some additional advice but I do not know (I had to look in California exemptions some years ago but California seems to permit what we in Pennsylvania forbid, the selling of Marital property for the debt of one spouse, but again I point out I do NOT practice in California and strongly suggest you talk to an attorney in his state).

Furthermore Pennsylvania is a State that has a program to help people with severe medical problems and are low income (The Healthy Horizon program). Other states have similar programs, but other states (and I see you are living in Georgia, and the Southern States are well known NOT to provide such programs).

One last comment, if he is having problems with creditors calling him, tell him he has the right under the Federal Debt Collection Act (and similar state acts) to tell the Debt Collector to stop calling him (This rule only applies to debt collectors NOT people trying to collect their own debts but I have had good luck with my clients telling people NOT to call them).