Miami, FL bankruptcy attorney discusses bankruptcy and medical debt. Call (305) 417-4111 to schedule your consultation.
According to a 2021 LendingTree Survey, 60 percent of Americans have been in debt due to medical bills. Many of those surveyed stated that medical debt prevents them from achieving financial milestones such as homeownership or retirement savings. On average, those who are in medical debt owe thousands of dollars. Unpredictable and unavoidable medical procedures frequently fuel medical debt.
Medical debt affects nearly everyone, but it can be particularly burdensome for those who require chronic treatment, such as cancer, heart disease, or diabetes patients. Patients’ long-term illnesses can keep them in and out of the hospital, and the only certainty is that they will receive a bill after their visit. Eighty-two percent of those with medical debt reported that they or a household member have an underlying health condition.
Are you experiencing crushing medical debt and don’t know where to turn for help? Dalyla Santos, a bankruptcy lawyer and the founder of The Santos Law Offices, PA, with offices in Miami and Orlando, Florida, explains medical debt and answers questions about obtaining relief from your medical debt.
Medical Debt in the United States
In the United States, medical debt is a significant issue. For years it’s been the number one reason people file for bankruptcy, even though the more common assumption is that those in financial distress have overspent in other areas of their lives. According to medical debt statistics data analyzed from the Survey of Income and Program Participation, approximately 23 million Americans (nearly 1 in 10 adults) owe $195 billion in medical debt. It’s no surprise that many people go bankrupt due to medical bills and out-of-control healthcare costs.
You’re probably curious about what percentage of bankruptcies are due to medical debt. According to one study, medical issues accounted for 66.5 percent of all bankruptcy proceedings, and about 530,000 families sought bankruptcy relief each year due to medical issues and debt.
Negotiating with Creditors on Medical Debt
According to the Bureau of Labor Statistics, the average American household spends more than $5,000 per year on healthcare, and believes they are obligated to pay the dollar amount their medical provider or insurer says they owe.
Fortunately, negotiating medical and hospital bills is possible through various strategies, including seeking financial assistance or enrolling in a gradual repayment plan. But what if, despite your best efforts, you are unable to pay your medical bills? Is there anything you can do when creditors are now threatening to garnish your wages or even sue you?
Can I Refuse to Pay My Medical Bills?
If you do not pay your medical debt, your creditor will send your bill to collections. Your credit score will suffer as a result. If you still don’t pay, the debt collector or service provider may sue you, which means you might have to hire an attorney and go to court. If you are found liable for the debt, the court may order the garnishment of your wages.
Ignoring “payment due” notices isn’t a viable option unless you want to end up with a civil court lawsuit. It is wise to make every effort to learn how to negotiate medical bills and resolve them before they worsen your situation. If you aren’t getting anywhere with your creditors on your medical debt, consult with a bankruptcy attorney to learn what other options you may have.
When Should I Consider Filing for Bankruptcy to Eliminate Medical Debt?
Medical debt causes anxiety and stress in those who have it, with the majority losing sleep worrying about it. During this trying time, you may be considering whether you should file for bankruptcy to deal with your overwhelming medical debt.
Lawyers for bankruptcy recommend that you consider filing for medical bankruptcy if:
- You have additional debt in addition to your medical debt.
- You have made numerous unsuccessful attempts to negotiate a reduction or elimination of your medical debt with medical creditors.
- Your medical provider is not going to offer you a manageable payment plan.
- Creditors have threatened to report you to a credit bureau or have already done so.
- You do not qualify for Medicaid or Medicare.
What Happens to My Non-Medical Debts If I File for Bankruptcy?
There is no separate bankruptcy proceeding for medical debt. However, because medical debt is considered a non-priority unsecured debt, this legal process may provide you with medical debt relief in addition to discharging other debts, including:
- Cell phone and utility bills that are past due
- Rent arrears
- Debts owed to relatives and friends
- Loans to individuals
- Debt incurred through credit cards
Which Chapter of Bankruptcy Should I File to Eliminate Medical Debt?
Before you do anything else, consider that bankruptcy will have a long-term impact on your credit report, lasting anywhere from 7 to 10 years. It is not a decision to be taken lightly. Medical debt can be discharged in a Chapter 7 or Chapter 13 bankruptcy. However, each type of legal proceeding has its own set of procedures.
If you don’t have a stable or regular source of income and your assets are worth little or next to nothing, filing for Chapter 7 bankruptcy may be a good option for you. There is no limit on the number of debts you can have. It’s also a viable option if your primary goal is to eliminate medical debt.
Chapter 13 is the best option if you have a steady income and assets that you don’t want to lose. In a Chapter 13 bankruptcy, the bankruptcy court will set up a repayment plan that allows you to pay off your debts, including medical bills, in manageable installments. All your remaining debt will be discharged by the court once your repayment plan is completed.
Is Bankruptcy Right for Me?
Many people file for bankruptcy under Chapter 7 or Chapter 13 to get rid of their medical debts. Your current financial situation determines the type of bankruptcy best for you. Make sure to do your research and consult a bankruptcy lawyer before making any decisions. While bankruptcy can eliminate your unpaid medical bills, it will hurt your credit score. Before filing for bankruptcy, try other options to get rid of your medical debts, but if all else fails, you know you have an option to eliminate your crushing medical debt.
Don’t Deal with Crushing Medical Debt on Your Own. Let The Santos Law Offices Help
Are you facing bankruptcy due to overwhelming medical debt? You don’t have to do this alone. At The Santos Law Offices, we focus on giving each Florida client professional, effective, and affordable legal services.
We offer free consultations, including Saturday consults by appointment. We will do this call over the phone or Zoom for your convenience, so you don’t have to deal with traffic or parking.
If you prefer a face-to-face meeting with a bankruptcy lawyer, you can also schedule an appointment in our Miami or Orlando office. We also speak Spanish. Call us at The Santos Law Offices, PA in Miami or Orlando today at (305) 417-4111 or fill out our contact form for legal advice from a bankruptcy attorney.
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The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.