Get Ready To Break Free From Medical Debt
Facing a mountain of medical bills can feel like a relentless storm, leaving you gasping for financial air. If you are a resident of Brandon, Florida, and the weight of medical debt threatens to pull you under, you are not alone. But take heart—there is a lifeline: Brandon’s robust legal landscape offers resources and options, including bankruptcy and medical debt relief in Brandon, FL, to help you regain control and find relief.
Medical bills can be eliminated through bankruptcy since they are categorized as unsecured debts, similar to credit cards. Unless there is an unusual situation involving fraud or similar issues, you can typically include your medical debt in your bankruptcy and get it discharged.
- Bankruptcy covers broad debts, such as credit cards, mortgages, personal loans, and utility bills, not just medical debt.
- There is no medical bankruptcy in legal terms. Individuals use bankruptcy primarily due to overwhelming medical expenses.
- Chapter 7 and 13 bankruptcies offer medical debt relief through possible discharge if full payment proves impossible.
- There are strategies for questioning validity and reducing amounts to contest medical debt.
- Explore alternatives to bankruptcy, such as negotiation, payment plans, credit counseling, and debt management.
- Some decision factors to file for bankruptcy are unsuccessful negotiations, challenging payment plans, credit report damage, and inadequate insurance.
Chapter 7 and Chapter 13 bankruptcies offer avenues to potentially ease the burden of medical bills and restore financial stability. It is crucial to approach the decision-making process with careful consideration. Evaluate your unique circumstances, eligibility for discharge, and the potential impact on your credit score before determining the most suitable path forward.
What Does Bankruptcy Mean?
When you file for bankruptcy, you must list all your debts, like credit cards, mortgages, personal loans, and utility bills – essentially, all the money you owe but cannot pay. It is uncommon for medical bills to be the only debt in bankruptcy, and the idea is that all creditors should be treated fairly. You cannot ignore the debts you do not want to deal with. Treating creditors fairly does not mean treating them equally. If the debt is not backed by property (unsecured), it falls into two categories – priority and non-priority.
Priority debts come first. Usually, taxes are at the top, followed by alimony and child support. Credit cards, utility bills, and medical debt are not considered a top priority. If not much money is left after paying priority debts, bad news for the other creditors. They might get only a fraction of what you owe or nothing at all. In any case, you will not owe them anything anymore.
What is Medical Bankruptcy?
Medical bankruptcy is an informal term often used to describe a situation where an individual’s overwhelming medical expenses lead them to consider filing for bankruptcy. In this context, it implies that the primary reason for the bankruptcy filing is the burden of high medical bills and related healthcare costs. Remember that, from a legal perspective, there is no specific category called medical bankruptcy. Instead, individuals typically file for bankruptcy to address various debts, including medical expenses, under existing bankruptcy laws. The term underscores the significant impact that healthcare costs can have on an individual’s financial situation, often necessitating the need for bankruptcy as a means of financial relief.
What Happens to My Medical Debt in Bankruptcy?
Dealing with medical problems is already stressful, and facing a substantial debt burden afterward only adds to the challenge. Unfortunately, this scenario is all too common. Medical bills are a leading cause of bankruptcies, leaving many individuals, some still grappling with health issues, burdened with significant medical debt of hundreds of thousands of dollars. The question arises: Can medical bills be part of bankruptcy? For most people, the answer is yes.
Medical bankruptcies, which result from overwhelming medical debt, are widespread. Filing for bankruptcy often becomes a lifeline for those seeking relief from the weight of exorbitant medical expenses. Even if individuals previously dismissed bankruptcy as an option or perceived it as a failure, it becomes the most practical choice when confronted with unpredictable and costly health issues.
The good news is that medical debt is dischargeable in both Chapter 7 bankruptcy and Chapter 13 repayment plans. In either scenario, medical debt is discharged if it cannot be paid in full. That means you can move forward with your life without the looming burden of medical expenses. Achieving a fresh financial start, even with ongoing health issues, provides significant relief and allows you to focus on other aspects of your well-being.
How to Contest Medical Debt
Accruing medical debt is a possibility, even for those who manage their finances diligently. Primary contributors to medical debt include hospital bills, unforeseen illnesses or accidents, and costs of medications. Given the high expenses of healthcare, steering clear of debt in this context can be challenging.
Even individuals with comprehensive health insurance coverage might find themselves responsible for certain debts, especially when accidents occur early in the year, resulting in significant deductibles and copayments before insurance coverage takes effect. Health insurance also entails out-of-pocket expenses and the potential for denied claims. Thankfully, there are avenues to dispute some of these incurred costs.
Challenging Costs with Your Health Insurance Provider
Health insurance companies may reject claims for various reasons, such as missing paperwork, incorrect coding, or inadequate documentation from healthcare providers. In such cases, individuals can file an appeal with their insurance company, seeking a review of the denial.
Challenging Costs with the Hospital or Healthcare Professional
Requesting an itemized bill detailing the provided services can be advantageous. While hospitals typically present a total bill, an itemized medical bill breaks down the costs of each service, exposing potential hidden expenses within the healthcare system. This detailed bill can also help identify errors, which are prevalent and can lead to significantly inflated charges.
Furthermore, many hospitals are open to providing substantial discounts on medical bills for individuals facing financial hardship. Offering proof of income or disability qualifies individuals for these discounts, providing a viable option to ease the financial burden of medical expenses.
How Can I Get Rid of Medical Debt?
You can eliminate your medical debt by seeking relief through either Chapter 7 or Chapter 13 bankruptcy. Before submitting the bankruptcy petition, it is necessary to complete a credit counseling class. Following that, you must decide on the type of bankruptcy to file, with Chapter 7 and Chapter 13 being the two prevalent options.
Chapter 7 Bankruptcy
Seeking protection from creditors through Chapter 7 is a way for struggling borrowers to eliminate various debts, including medical expenses. Chapter 7 is known as a liquidation bankruptcy.
In this process, a bankruptcy trustee sells the debtor’s eligible assets to pay off creditors. Some assets are exempt based on state laws. The entire procedure usually takes four to six months. Once completed, the debtor can be relieved of medical debt, even if no funds were generated to settle healthcare providers. Most Chapter 7 cases are no asset filings, where creditors receive nothing, but debts are discharged nonetheless.
However, the drawback of Chapter 7 is that filers may have to surrender their property, including their homes, in some instances. Chapter 7 is designed for individuals who lack enough income to repay creditors.
To determine eligibility, the bankruptcy court employs a means test. Individuals with jobs and sufficient income to repay creditors must file under Chapter 13 generally.
Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, or wage earner’s bankruptcy, debtors develop a plan to repay creditors over three to five years. They use their disposable income for payments. Sometimes, medical bills are part of the repayment plan.
The advantage is that filers may retain their relationships with healthcare providers if they repay at least a portion of their bills. This aspect can be crucial for a debtor’s future health and well-being.
Other Ways to Get Rid of Medical Debt
If your sole debt comes from medical bills, opting for bankruptcy may not be the most suitable choice. Bankruptcy can significantly impact your credit, with Chapter 7 remaining on your credit reports for up to 10 years from the filing date and Chapter 13 for up to seven years. It is considered a negative mark that can lower your credit score, though its impact diminishes over time.
However, recent changes in credit reporting practices concerning medical debt offer some relief. Medical debt in collections but has been paid off will no longer appear on credit reports. Additionally, consumers have a one-year grace period before unpaid medical debt is listed, and medical debt of less than $500 will not appear on credit reports.
Given these developments, you may want to explore alternatives to bankruptcy for managing substantial healthcare bills:
- Negotiate with the medical provider: Many hospitals and providers may accept smaller immediate payments rather than pursuing uncertain collection efforts.
- Enter a debt management plan: A nonprofit credit counseling agency can help you create a debt management plan and negotiate with creditors on your behalf, potentially securing more favorable terms.
- Consolidate your debt: Consider obtaining a personal loan with a low-interest rate or applying for a credit card with a 0% APR to pay off medical debt. That can provide some breathing room, but developing a plan for repaying the balance is essential.
- Sell assets: Liquidate some assets, such as a boat or a second car, and use the proceeds to settle medical debts. This approach is a modified form of liquidation without involving a bankruptcy trustee.
- Raise money: Explore crowdfunding as a new method to address medical debt by seeking financial support from the public through online platforms.
How Do I Know If Bankruptcy Is the Best Option for Me?
Including medical bills in bankruptcy can offer various benefits, but remember that filing for bankruptcy due to medical debt may not suit everyone.
How can you determine if you are eligible? You should contemplate medical bankruptcy if:
- Medical debt is not your sole debt, and other debts were manageable before your health issues emerged.
- Attempting to negotiate with medical creditors to reduce or eliminate your debts has proven unsuccessful.
- It is challenging to establish a payment arrangement directly with the medical care provider – while some may accept minimal monthly payments like $10 or $20, this is not always an option.
- Your medical debts have been reported to a credit bureau, or creditors are threatening to do so – a situation that may occur less frequently with medical debt than other debts.
- Medicaid or Medicare does not provide adequate coverage for your medical expenses.
Dealing with medical debt is not guaranteed, and everyone’s situation is unique. In some cases, managing bankruptcy and medical debt relief in Brandon, FL, might be more feasible than handling other types of debt, offering more alternatives.
Let Us Help You In Dealing With Your Bankruptcy and Medical Debt Relief Case
Are you feeling unsure about navigating bankruptcy and finding relief from medical debt? You are not alone in this confusion. Both Chapter 7 and Chapter 13 bankruptcy provide avenues to alleviate your medical bills and regain financial stability.
However, it is critical to recognize that there is no one-size-fits-all solution. Before making any decisions, carefully assess your circumstances, eligibility for discharge, and the potential impact on your credit score.
If the complexity seems overwhelming, consider seeking legal assistance. The Golden Law Group, a bankruptcy law firm in Brandon, FL, offers a free consultation to explore your options for medical debt relief. Our knowledgeable bankruptcy attorneys provide guidance tailored to your situation during this consultation. To take the initial step towards financial freedom, contact us for a thorough consultation and a clear roadmap to alleviate your medical debt through bankruptcy.