In a different post, we discussed the fact that Medical Insurance can actually help you maintain your finances and prevent you from having to deal with a bankruptcy procedure. This is true in the event that you have to deal with a sudden, serious diagnosis that requires prolonged, expensive treatment. It is always a good idea to ensure that you have a strong Medical Insurance policy that can protect you in the event of these unforeseen and serious issues. Insurance is one of the few purchases you can make that can protect you against crushing medical bills, no matter how healthy you are.

However, it might also be wise to understand how medical expenses will be calculated and dealt with in the event that you end up going through a bankruptcy proceeding anyway. As you probably already know, the general purpose of a bankruptcy proceeding has very little to do with your Medical Insurance. In the past, most people who were dealing with bankruptcy did so in order to eliminate consumer credit, such as credit cards. These debts would be restructured or discharged, giving the bankrupt person the ability to start anew — although they would inevitably lose some financial assets along the way.

You may not realize, however, that there are some categories of debt that are very rarely addressed through a bankruptcy proceeding. These are held apart from consumer credit. For example, loan servicers have lobbyists who have worked in the halls of Congress for many years to ensure that college students can virtually never meet the requirements to discharge their college loan debts in bankruptcy. As a result, students who find that their education does not meet the lofty promises of employment given by colleges and financial aid officers are generally “out of luck.” Is this true in regards to your Medical Insurance expenses?

The answer, as with everything to do with healthcare, is “it depends.” Of course, no one wants to go through a bankruptcy proceeding due to their Medical Insurance or medical expenses. However, you might find that not all of your debts relating to healthcare can be discharged through a standard bankruptcy proceeding. Since Medical Insurance is very separate from other forms of consumer credit — such as credit cards — you will most likely be expected to enter into a long-term payment agreement. This agreement will be brokered and ordered by the court, so it may be more favorable than what you could achieve on your own.

Medical Insurance