When people think about the debt listed on their credit reports and how the debt is affecting their credit scores, most are probably thinking of credit card debt. However, medical debt is a huge issue for people trying to make ends meet. Medical debt is not immediately reported on credit reports, until it has been delinquent by at least a few months.
Medical debt is usually turned over by the medical provider to an outside collection agency once the debt is a few months past due. The collection agency will then report the debt to credit reporting agencies. Once the medical debt is reported as a collections account it will likely stay on the credit report for the next 7 years. Even if the medical debt is eventually paid in full, the collection may stay on the credit report causing problems when you try to finance a car at a reasonable interest rate or take advantage of low mortgage rates.
Medical debt presents a unique situation for married debtors. Kansas and some other states follow the Doctrine of Necessities which extends liability to both spouses on medical debt incurred during the marriage. For example, say wife needs surgery; husband will be just as responsible for the costs of the surgery not covered by insurance as his wife. Many times unexpected, major medical procedures can turn a household’s finances upside.
Medical debt is commonly referred to attorneys to seek a judgment in the Limited Actions division of the local county courthouse. Once the medical provider receives a judgment they are able to pursue collection by garnishment of wages or bank accounts. A garnishment of a debtor’s wages can cause the debtor to become delinquent on their rent, mortgage, car loans, or other secured debt. Medical debt is dischargeable in a chapter 7 bankruptcy and chapter 13 bankruptcy. A debtor can discharge their medical debt, credit card debt, payday loans, etc all in one case.
If debtors find themselves struggling with medical debt they should speak with our Kansas City Bankruptcy attorneys. Our attorneys offer free initial bankruptcy consultations to advise debtors if bankruptcy is a good option in their particular situations.