A high rate of bankruptcy among patients could be affecting the quality of your medical care.
Bankruptcy does more than just damage your credit. It can leave the people you trust the most, such as a parent who cosigned a loan or a doctor who put a cast on your leg, in a financial pickle.
Your Cosigner Pays
In March 2008, the Attorney General's Office in Michigan released an alert that contained important information for anyone considering being a cosigner. Included in the list was a bullet point that explained how a cosigner will be responsible for the debt if the borrower declares bankruptcy. The Federal Trade Commission (FTC) seconds this assertion. According to the FTC, when a borrower defaults on a loan, creditors contact the cosigner 75 percent of the time.
You Pay
Those who are considering filing bankruptcy will find that there are two types of financial relief. The first, known as Chapter 7 bankruptcy, means that debts do not have to be repaid and all property associated with those debts is confiscated. The second type, known as Chapter 13 bankruptcy, involves the creation of a payment plan that allows you to keep your belongings as long as you make court-mandated payments. Ultimately, you are still the one paying the debts if you choose to file Chapter 13 bankruptcy. While some borrowers may see Chapter 13 as a godsend, be forewarned that many who file are unable to stick to the payment plan. According to Justin Harelik, a bankruptcy adviser for Bankrate.com, only approximately 25 percent of Chapter 13 filers make all the mandated payments and are released from their debt.
Insurance Companies and Health Care Providers
When medical bills get too steep, many Americans are turning to bankruptcy as a solution. But if the patient does not pay, who foots the bill? While a health care provider is not allowed to contact a patient about unpaid bills if bankruptcy has been filed, an article in "American Medical News" says the provider can contact the patient's insurance company to try to collect the money owed. If the insurance company does not pay, the hospitals and private practices have little recourse. The bills simply go unpaid and the administration has to deal with the deficits in the budget. According to "Newsweek," every year approximately $60 billion worth of medical bills are left unpaid. These unpaid bills can mean that hospitals are understaffed and medical offices are unable to afford cutting-edge equipment. In the end, the providers carry the burdens associated with budget deficits.
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