Filing Medical Bankruptcy Regulation Proposal
What is the Proposed Bankruptcy Regulation
I was not aware that there was a new proposal in the bankruptcy regulations until I watched C-SPAN today. There was a Senate hearing being conducted to discuss changes in the bankruptcy law if the primary reason someone filed for bankruptcy was due to being unable to pay medical bills.
The law as described by the panel would allow someone in this situation to not be required to pay the medical debts or credit caard debt if their income was below the median income limit in the United States. If the income is above the median income limit a bankruptcy judge would be able to decide how much of the debt the person would have to repay. In addition to this someone who met the criteria would not be required to complete the questionnaire online regarding why they needed bankruptcy protection if they had already given this information to their attorney. Let me say that these are the only issues that were discussed during this debate. There may be other things in the bill, but I am just focusing on the information I viewed on CNN this morning regarding this regulation.
Will Filing Medical Bankruptcy Help or Harm the Consumer?
After listening to all these witnesses I am not sure if the proposed medical bankruptcy regulation is a good one or not. I really sympathized with the couple whose son had passed away, but we all face difficult times. It is the decisions we make during these difficult times that make the difference. I do agree that what happened to them was beyond their control but I am not sure that it is the Federal government's responsibility to change a regulation based on this type of personal situation. I do believe that there are people who would benefit legitimately from filing medical bankruptcy. On the other hand there are people who will suffer when this type of legislation is passed. What is to stop someone who may can afford to pay their bills from using this regulation as a way to not pay those bills. While this couple really did use all their assets when their son became ill, not all people in this situation would have quit their jobs and moved without another job to keep the health insurance.
I do not mean to sound insensitive but we all make decisions based on what we feel is right for our families. i remember when my brother was shot and in a wheelchair. He needed constant care. My mother really needed to be by his side, but she knew that she could not afford to do this so she kept her job so that she could keep a roof over our heads. My mother had an 8th grade education and we did not have all these laws back in the 70s and 80s to avoid paying bills (if we did she did not know about them) so she did what she had to do.
I think that filing for bankruptcy has become the thing to do especially if you are about to lose your home. However I don't think there should be special stipulations based on the reason someone has to file for bankruptcy. While her need to file bankruptcy may be based on a medical situation, it does not mean that she is in any worse shape than someone who has to file bankruptcy because of a divorce. The reason for the bankruptcy may be different but the outcome is the same. I think if this legislation is allowed to go forward there will be an increase in the number of people filing medical bankruptcy instead of bankruptcy in general.
This type of legislation me is akin to the type of regulation that will allow a corporation to file for bankruptcy even though its owner is a millionaire. For example Donald Trump has filed for bankruptcy several times and is still a millionaire. This type of legislation will allow an individual to file for medical bankruptcy even though he may have the ability to repay his debtors. i can no more blame this individual than I can blame this lady who has lost her son from filing bankruptcy. After all, it is the law.
Real Life Case for Filing Medical Bankruptcy
The first person I heard discuss this was a woman whose son had died sometime in the spring of this year. Her story was very sad but I suspect is not so different than many others who have children that are suffering from major illnesses. Her ordeal started when she and her husband quit their jobs to spend time with their son who was hospitalized in intensive care in a city that was not where they resided. While her husband's insurance from work did pay a larger portion of the medical bills, which totaled about $5 million dollars, there was still more costs left that they could not afford to pay out of pocket.
She and her husband went to see a bankruptcy attorney to file for bankruptcy. She indicated that her home was being foreclosed upon because they tried to pay the mortgage and did for several months but could not continue to do so. The bankruptcy attorney charged $250 upfront for the consultation. Another $1300 was needed to actually file the bankruptcy petition. They were also required by law to complete the online class which costs an addition fee (she did not say how much). This process started in April and she stated she still had not finished because it was just so stressful.
Other Witnesses at the Hearing
There was just the one example of someone going through bankruptcy. Therefore I will give a brief summary of the so called expert witnesses testifying before this Congressional Panel. One of these witnesses described a study that was conducted by Harvard which shows that over 60 percent of the people filing for bankruptcy was filing due to some major medical expenses. When asked later on what dollar amount was considered as major medical expenses. It was revealed that $1000 spent over a 2 year period was considered to be major medical expenses.
Another witness testified that a large majority of the people filing medical bankruptcy was people whose incomes were below the median income of the United States. This witness also suggested that the costs for these individuals may have been much more for medical costs but they had no health insurance so they did not visit the doctor on a regular basis.
The next witness gave testimony that if the law was passed it would open doors for all sort of abuse to the bankruptcy laws. She suggested that if someone was allowed to include credit card debt as part of their bankruptcy filing, they would claim that medical expenses were the cause for the bankruptcy.
I was a little confused by the last witness. She focused her entire testimony on the health insurance issue. She basically tried to tie in the idea that having a public option health insurance provision in the health reform law would help lead to more filings of bankruptcy and therefore cause more harm to the majority population in the country. She did not even touch on the proposed medical bankruptcy law until she was specifically asked to comment on the law. One Senator just point blank asked her was she in the wrong hearing.
Reading Material For Bankruptcy
Do you think there should be special provisions for bankruptcy due to medical expensesSee results without voting
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