Insurmountable Medical Debts & The Bankruptcy Option

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A January 2006 motorcycle accident left an Olivenhain, CA resident paralyzed from the waist down. While still undergoing his recovery and rehabilitation, the man established the HeadNorth Foundation, a Del Mar-based nonprofit, to support people affected by spinal cord injuries (SCI).  According to the executive director at HeadNorth Foundation, there are an estimated 3,000 SCI survivors in San Diego County. 

SCI is a life-changing condition generally caused by motor vehicle wrecks, bicycle crashes, sports injuries, slip and falls, or pedestrian accidents when there is a sudden, traumatic blow to the spine that fractures or dislocates vertebrae.  SCI occurs suddenly, forcing patients to deal with the life-changing event with limited money and body components. Life enjoyment after any tragedy may be cut short only by a person’s imagination, but medical costs associated with a SCI can be devastating. For example, a paraplegic SCI that needs life-long treatment can average $425,000.  Long-term care for a SCI may include:

  • Surgeries
  • Pain medication
  • Physical therapies
  • Mobility equipment
  • Home renovations
  • Care providers

Without medical insurance or a settlement with the responsible party, physical problems, can put a person in debt for life, especially when the problems prevent the person from earning income.  Hospitals, doctors, and other medical providers usually want to get paid right away after providing services, and a person may get collections notices and lawsuits for unpaid bills.  If the hospital is public, such as San Francisco General Hospital, an invoice that goes unpaid is sent to collections, and a lien may be placed on any real property a person owns in the county.  Bankruptcy may be the alternative to get rid of insurmountable medical debts. 

Instead of spending the next 10 or 20 years paying off bills, bankruptcy offers a fresh start towards a savings and investment plan for future economic security and thoughtful debt elimination.  In bankruptcy, medical debts are considered unsecured credit, with low priority in getting paid. If there are not enough assets in the bankruptcy estate, the debts get discharged upon bankruptcy closing.  Discharging debts in bankruptcy frees up cash to pay for essential items like food.  Without bankruptcies, a person may end up having to choose between medical bills and life necessities.