It’s not new but it’s getting to be a new problem for folks who cant afford medical procedures: credit provided by medical credit cards and lines of credit for folks who may, or may not, have medical or dental insurance. So what is this medical credit card? And is it dischargeable in bankruptcy?
Here’s how it works: if you can’t afford a procedure, your doctor, or dentist, hooks you up with a “line of credit” from a specialized lender. The lender pays the doctor, you get your procedure, and everyone is happy. Right? Unfortunately, when folks read the fine print, they are often somewhat unhappy. Why? Perhaps because the fine print includes high interest rates – some start around 20% and go up to 33%. Some end up in bankruptcy.
What Types of Medical Providers Use Medical Credit Cards?
We have not been able to find a comprehensive study of who is using these medical credit cards and medical lines of credit. It seems, however, that dentists, dermatologists, hearing aid providers, optometrists, and other more elective type of providers are the key medical providers. Icare of Atlanta markets to medical providers asking them about the money they are loosing by not using this type of financing system. CreditCare, a part of General Electric, has been found to be deceptive in it’s advertising, according to the NY Attorney General. The Ohio Attorney General has sued medical credit card providers who misled hearing aid patients.
Neither the American Medical Association nor the American Dental Association has any official policy on medical credit cards. However, while some providers encourage their patents to use the lines of credit, and even facilitate them in the office, other providers refuse to use these credit cards, finding their terms onerous for their patients.
Who Are the Primary Users of Medical Credit Cards?
Seniors. Folks on fixed incomes, such as Social Security and pensions. Medicare may not cover needed procedures. Folks who need dental work but have no dental insurance and limited incomes and savings. Folks who want a simple, uninsured, procedure, and think the cost will be nominal. Folks who may not need a procedure, but want one anyhow, may opt for this type of financing.
It should be noted that if you use this type of payment plan for your doctor or dentist, he or she is being paid up front. Immediately. While the provider may like this, and in fact require it, a more generous plan might be for the doctor and patient to work out a payment plan. This requires both parties to work together, over time, however.
Are Medical Credit Card Bills or Lines of Credit Dischargeable in Bankruptcy?
Yes. There are no restrictions in bankruptcy law that would prevent these loans from being discharged in a bankruptcy filing. The “fresh start” provision in the bankruptcy laws would allow folks with medical bills, medical credit cards, and medical lines of credit, all to be discharged in the event the debtor has such bills.
The amazing attributes of the federal bankruptcy laws, is that most debts are dischargeable. Whether you have consumer debt, a repossessed motor vehicle, owe money on a foreclosed house, or medical debt, so long as there is no fraud, and no specific exclusion, most folks can retain their assets and discharge their debts.
Call or email an experienced bankruptcy lawyer if you have questions about medical credit cards and need to discharge your debts.
