More than half a million families file for bankruptcy each year due to medical debt. In fact, it’s the most common reason, with 66% of debtors citing medical debt as a major factor in their financial downfall. (The other two most common reasons are unaffordable mortgage/foreclosure, 45%, and overspending, 44%.) Sadly, the Affordable Care Act didn’t impact these statistics as hoped; bankruptcies caused by medical expenses actually rose after the legislation was passed.
While shrinking benefit plans from employers and skyrocketing price tags are partially to blame, the trend is also explained by the fact that bankruptcy is a good solution for individuals overrun by medical debt. Unlike child support or taxes, which are considered primary and non-dischargeable, medical debt is categorized as a general unsecured debt that can be eliminated through Chapter 7 or Chapter 13 bankruptcy. Under the right circumstances, it can just go away.
Exhausting your options first
The downsides of bankruptcy are obvious; it’s a last-resort. The consequences are severe enough that districts require individuals to complete educational counseling before filing. For medical debt, there are some specific alternatives to consider before bankruptcy.
- Attempt to negotiate a settlement with the provider
After ensuring you’ve maxed out what your insurance will pay, talk with the hospital about negotiating a settlement for the remainder. Many hospitals discount or waive expenses for the uninsured as a matter of routine.
- Ask about assistance programs
Get in touch with the hospital’s financial aid counselor to see if you qualify for available aid. Low income, federal or state programs, policies about uninsured patients; there are layers of aid packages out there that could reduce or eliminate your medical debt problem. You won’t know unless you ask. Expect there to be some sort of application process to get approved.
Sometimes these lifelines can make a huge difference. Other times they are unavailable. Some initial figures are large enough that partial reductions or available aid packages don’t change the amount owed into something that fits the budget.
Drowning in medical debt is a common problem; a recent study showed three out of five Americans do not have $1000 set aside for a medical emergency. These days, $1000 hardly covers filling a couple of cavities; not nearly enough to handle an emergency room visit, treatment for a curable disease, or an extended hospital stay. This is a harsh truth about modern times; most of us are one medical event away from teetering on bankruptcy.
If your budget was turned upside down from a recent hospital visit, or if you find yourself unable to pay other bills due to medical expenses, don’t wait to take action. Contact the debt relief experts at The Law Offices of Jeffrey Lohman today. We will do a thorough assessment of your situation to determine the best path forward. If that option is bankruptcy, we will ensure your case achieves the best possible outcome.
The Law Offices of Jeffrey Lohman, P.C. is considered a debt relief agency pursuant to federal law. We are attorneys who help people file for bankruptcy relief under the Bankruptcy Code.