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Bankruptcy may wipe out medical and credit card debt

On behalf of Bankruptcy Law Firm of Clare Casas on Saturday, October 26, 2013.

There's a new credit tool that combines the easy usage of credit cards with the purchase of medical services. This new gimmick, available in Florida and elsewhere, is called a medical credit card. According to a news report, this new credit device is burying some people in medical credit card debt due to high interest rates, ominous fees and huge monthly minimum payments.

One woman used this device to get extensive dental work that she couldn't afford. The dentist's assistant suggested it and helped her fill out the forms. Now, the payments are so high that she suspects that she'll be paying on it for the rest of her life.

These types of credit cards and personal loans, once offered for special elective procedures are now promoted for routine medical services. The cards are proving disastrous for many consumers because of the unfavorable credit terms, according to an investigative report by the New York Times. There is a way out for consumers. It's called personal bankruptcy.

By federal law individuals and married couples may file a Chapter 7 bankruptcy and discharge all unsecured debt, including credit cards, medical bills and other unsecured loans. The debtor usually loses no personal property because there are exemptions provided by applicable federal or state laws. Relief is swift and permanent.

Some people go through all kinds of suffering to avoid bankruptcy, which they believe will wreck their credit forever. That's an urban myth that's not true. First, it must be remembered that the person's account is already wrecked by large amounts of unpaid debt. These festering accounts are being reported and keeping the person's credit score in the cellar.

However, in Florida and elsewhere a completed bankruptcy can actually stimulate repairing one's credit score. The bankruptcy has cleaned out all of that rotted debt, leaving what's called a clean slate. In fact, the purpose of federal bankruptcy law is to give people a fresh start. The bankruptcy falls off one's record usually quite faster than the 10-year period during which it's allowed to be reported. Creditors for the most part seem to like starting up a new relationship with consumers who have cleaned out all of their old credit card debt.

Source: Health News Florida, Medical Credit Cards: Watch Out, No author, Oct. 14, 2013

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