Protect Your Home from Medical Debt
Life is uncertain, and one of the financial worries for many Americans is the possibility of overwhelming medical bills. Even for families with basic insurance coverage, situations can occur where chronic conditions, coverage limits, the high cost of prescription drugs, and ongoing care, recovery from illness or injury create debt that is difficult to manage.
A common worry for families at any income level is how to pay off medical debt fast. An even bigger worry is how medical debt can affect your home ownership.
Here's What You Need to Know
The simple answer is “maybe.” Although there is seldom any direct action available to a physician or hospital that will result in loss of your home, or require you to sell, there are some actions permitted in some states that can make it difficult to stay in your home and continue to make mortgage payments. Even in states with protective “Homestead Laws,” paying off medical debt can make maintaining the costs of home ownership much harder.
A personal judgment for non-payment of medical expenses will almost certainly affect your credit rating,. In turn, this can impact your financial stability. Although liens against property typically are granted only for property-related debt, there are some cases in which a lien might be attached to a home; typically, such a lien would have to be paid at time of sale, or out of the assets of the estate.
Just as in other forms of business and commerce, local and state laws have widely varied ramifications for a homeowner. When you purchase a home, ask questions up front about the circumstances that might lead to loss of your home specifically in your state.
Even if state and local laws permit seizure of real estate for payment of medical debt, such actions take time. However, once a foreclosure proceeding begins, it may be too late to try to work out a solution.
Many states have homestead exemptions, meaning the property designated as a homestead cannot be seized or liquidated for payment of debt. The protection ranges from 100 percent of value in some to limited amounts in others. Two states, notably New Jersey and Pennsylvania, offer no protection. It is always wise to check both with your real estate agent and local authorities to determine the exact protections available in your area.
If your home equity is substantial, it might be that selling your house for cash is a viable way to pay medical debt in full or to reduce the debt balance substantially. Then you can begin to rebuild your life with minimal debt and with your credit remaining intact.
Keep Some Basic Facts In Mind
First, you always have options about how to pay off medical debt.
Second, available choices will differ for every family, and there are no hard and fast rules about “best ways.”
Third, remember that doing nothing can be disastrous, and that acting quickly to formulate a workable solution is always the best course of action.
Finally, if you own a home, you might have additional protection, as well as some better options in the face of mounting medical debt. Your home can be used as a tool in the face of medical debt. Reach out to HomeGo for more information on leveraging your home equity to eliminate debt.
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