According to an expert St. Petersburg bankruptcy lawyer, nearly 70 percent of all bankruptcy filings are due at least in large part to overwhelming medical debt. Medical debt is one of the most unique forms of debt in that it stems from something that is often completely unpredictable, namely an illness or an accident. In many cases the illness or injury is a two-edged sword, resulting in huge hospital or doctor’s bills on the one hand, while preventing the injured or sick person from working and thus reducing their earning power, and therefore the ability to pay back the debt, on the other.
Medical Debt and Chapter 7
The most surprising statistic involving medical debt and bankruptcy, according to the bankruptcy lawyer, is that nearly 75 percent of filers have some sort of health insurance. The unfortunate fact is that health coverage providers often find loopholes in their coverage plans that leave them free of the responsibility of paying and put the financial burden on the individual.
Filing Chapter 7 liquidates your assets and discharges all unsecured debts, of which medical debt is one. So Chapter 7 may look like a good solution. But after filing Chapter 7, you must wait eight years to file again. So if you are undergoing continued treatment, your medical debt will continue to pile up again, and your situation will not improve.
Medical Debt and Chapter 13
Chapter 13 is the reorganization of debt into a structured repayment plan. Secured debts such as mortgages are paid off first, while unsecured debts like medical debt come last, according to the bankruptcy lawyer. Remaining debts after the repayment period are discharged. So this could be a good option for those faced with mounting medical bills.
The best first course of action is always to consult your bankruptcy lawyer, who will guide you to the solution that’s right for you.