When Medical Bills Turn Your Life Upside Down
Allyson and Marcus Ward know what medical debt can do to life. Their twins were born weeks before Allyson’s due date and were then diagnosed with cerebral palsy. Before they knew it, they were facing thousands of dollars in medical bills. They were insured, but many of the therapies were deemed inessential by their insurer. They worked extra shifts, borrowed from relatives, and charged up credit cards. Their typical middle-America lifestyle became fraught with worry as the debt mounted. They, like millions of their fellow Americans, were discovering that they were underinsured.
Finding a Way Out of Debt
If you can relate to the Wards’ story, you’re certainly not alone; billions of dollars in medical debt have altered the lives of Americans across the country. It’s important for families who are facing extreme medical debt to take steps to increase their financial security. That may include:
- Find out if you qualify for the hospital’s financial assistance program.
- If you do not qualify for assistance, start negotiating the bill with the hospital. Never agree to pay the sticker price! Negotiations may be lengthy and difficult, but if you are tenacious you can likely whittle down the debt and work out a payment plan.
- Do not put this debt on a credit card! Medical debt is at the bottom of your pile of bills—pay everything else first. That’s because your credit rating is damaged less by medical bills—and it won’t appear at all for at least six months. Finally, it will be erased from your credit report after seven years.
Ultimately, you may be forced to file for bankruptcy. While this can feel like a heartbreaking final step, it can relieve you of the constant pressure that has burdened you to date. There are two basic options to consider:
- Chapter 7: If you pass a means test and qualify for Chapter 7 bankruptcy. Essentially your monthly income must be below the state average in Florida, or you must be unable to cover basic expenses because you haven’t enough disposable income. A successful filing will result in the complete discharge of your medical debt—even that put on credit cards, and you will never be responsible to repay any of it. You may also eliminate overdue rent, mortgage, care and utility payments. The biggest drawback to Chapter 7 is that you will have to give up many possessions—up to and including your home oftentimes.
- Chapter 11: If your medical debt (combined with other debt) doesn’t exceed roughly $420,000, a Chapter 13 filing may be a good option. Under this filing, about 70 percent of your debt will be discharged, and the remainder will have to be repaid through a structured repayment plan. This is often a desirable option because it allows debtors to work out a way to repay a portion of their debt over a period of years, while keeping your home, vehicle, and other assets. However, you must earn enough to reliably make payments for the next five years or so.
What’s the Best Option?
If you’ve already suffered a major medical event, your nerves are likely frayed. Now the creditors are hounding you relentlessly. At The Law Office of Julia Kefalinos our knowledgeable and compassionate Miami bankruptcy attorneys can help you get your footing again. Schedule a confidential consultation in our office today.