Medical Bills Can Pile Up Fast - But There is a Lifeline Out

Bankruptcy, the ultimate financial fear for many Americans, is often the only refuge for a growing number of people struggling with overwhelming medical debt, including those with medical insurance.

The 2016 New York Times article, Even Insured Can Face Crushing Medical Debt, Study Finds, begins with this advice for the insured on avoiding medical debt: Don’t get sick.

Even with 15 million fewer uninsured people thanks to the Affordable Care Act, out-of-pocket medical costs can create a debt trap for many families living paycheck to paycheck, the New York Times reported.

According to a Kaiser Family Foundation/New York Times survey, 20 percent of working-age Americans reported problems paying medical bills that often cause serious financial challenges. For the uninsured, 53 percent face financial problems stemming from medical bills.

While the health care industry wrestles with the problem of managing costs, progress on the root solutions to price tags for many treatments, procedures and medicines has been sluggish. One strategy, however, cost sharing, is moving much more quickly, placing a growing burden on the individual, even those with insurance, according to the New York Times report.

According to the survey, for people insured when medical bills were incurred, 75 percent say insurance co-pays, deductibles, or coinsurance was more than they could afford.

The problem is not solely financial, either, but one that can also threaten to create additional health problems through neglect of necessary preventive care. People with health insurance who have problems with medical bills reported skipping or putting off other health care in the past year because of the cost, postponing dental care, skipping doctor-recommended tests or treatments, or not filling a prescription.

As a result of their medical debt, 35 percent of people in the survey said they were unable to pay for basic necessities like food, heat, or housing. 

For most families, medical costs for serious conditions, chronic and life-threatening diseases are not something that can be planned for. While the prospect of a financially crippling medical emergency can threaten to overwhelm a household, many people don’t know consulting a bankruptcy attorney through a firm like Swanson & Moors, LLC provides a lifeline they can take hold of to save their future as they struggle to regain their health.

Filing bankruptcy will allow you to eliminate all of your medical debt, along with your other unsecured debt.  There is absolutely no limit on the amount of medical debt that could be discharged in a Chapter 7 bankruptcy, while a Chapter 13 bankruptcy would allow you to eliminate no more than $394,725 of medical debt.

Filing Chapter 7 bankruptcy automatically stays, or stops, most collection actions against the debtor or the debtor's property. The stay is an effect of the law and requires no further action. With the stay in effect, creditors can’t initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.

With Chapter 13 bankruptcy, also commonly referred to as a wage earner's plan, individuals with regular income develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. 

Chapter 13 gives people the chance to save their homes from foreclosure. Under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Since this form of bankruptcy acts like a consolidation loan, with the individual making plan payments to a chapter 13 trustee who then distributes payments to creditors, debtors will have no direct contact with the creditors.

Swanson & Moors, LLC, bankruptcy lawyer Matthew C. Swanson is well prepared to help you map the path toward your fresh financial start that makes the most sense for you.

Don’t hesitate to schedule a free consultation with Swanson and have your bankruptcy handled by a seasoned attorney.

Swanson & Moors, LLC serves all of Plymouth County, Bristol County, Norfolk County, and Barnstable County. Call today.