Medical debt overwhelms millions

On Behalf of | Oct 16, 2020 | Personal Bankruptcy |

Medical costs have long been a common reason that Americans file bankruptcy. This may be due to not carrying health coverage at all, high insurance deductibles, or being forced to use a less expensive plan that did not cover the underlying injury or illness. CNBC points out that medical debt contributed to 66% of all bankruptcy cases filed in 2019 — and, each year, approximately 530,000 families file for bankruptcy due to medical debt nationwide

The reasons for this are not hard to see — the skyrocketing cost of medical care means thousands or tens of thousands of dollars of debt. It means that one severe illness or injury to a family member can wipe out their entire savings or force them to incur medical debt that is too high for them to repay.

Bankruptcy is often the best option

Medical bills are unsecured debt, like most credit cards, where there is no collateral. This means that the filer’s medical debt can be discharged in bankruptcy. Depending upon the filer’s circumstances, they may have two bankruptcy options:

  • Chapter 7: While not every filer qualifies, as income and assets determine which bankruptcy a person will qualify for, this eliminates medical bills and many other kinds of debt. Financial obligations such as mortgage and car payments as they are secured debts will remain as long as the debtor wishes to keep them and continue paying the monthly payments.
  • Chapter 13: Often best for those with jobs, this option restructures the debt to pay all or a portion of it over time. It also enables the family to keep assets that are not exempt under the Florida exemptions if they can afford to make payments.

It is best to weigh decisions during a consultation

Regardless of whether the medical debt was the final straw that broke the camel’s back or the entire reason for the family’s debt spinning out of control, filing bankruptcy can put an end to harassing phone calls, emails, messages, being sued by a creditor and possible wage garnishment.

Those with questions about their options s may want to discuss their circumstances with an experienced bankruptcy attorney practicing here in Florida. Their experience and insight can be invaluable in helping families recover from a financial setback. Sandra Day has been practicing in this area for 19 years and she offers a free consultation.