What is Medical Bankruptcy in South Florida?

The cost of healthcare in the United States is climbing, and it is one of the biggest financial burdens for Americans. In 2018 alone, medical care in the country cost $3.6 trillion. A recent Gallup poll showed that concerns about bankruptcy due to medical debt are also rising in the country. According to the poll, 15 percent of American adults reported that at least one person in their home had medical debt that will not be repaid within one year. Even those that have health insurance still incur copays and high deductibles that impose a financial burden on them.

Clearly, if you have medical debt, you are not alone. High medical expenses actually form the basis of many consumer bankruptcy cases. It is difficult to determine how many people file for bankruptcy based on medical debt, but it has been estimated that the number falls anywhere between 26 and 62 percent. If you have a high amount of medical debt and are considering bankruptcy as a way to discharge it, below are some important things to know.

Is There Such a Thing as Medical Bankruptcy in South Florida?

No. ‘Medical bankruptcy’ is not something that actually exists, even when you are trying to discharge medical debt during the process. This means that when you file bankruptcy to discharge medical debt, you cannot limit your case to avoid paying those bills alone. The bankruptcy laws of the state and country are intended to be as fair as possible to both you the consumer, and the creditor that will likely not recover the full amount of debt you owe.

In bankruptcy, medical debt is treated the same as credit card debt, personal loans, and utility bills under the bankruptcy code. Due to this, if you are filing bankruptcy as a result of medical bills you cannot pay, you can also discharge your other unsecured debts, as well. During the bankruptcy process, you must list all of your personal property, real estate, as well as your debts.

You must also list every household expense you are currently facing, and provide full disclosure about the income of your household. This is true even if your spouse does not file bankruptcy with you. You will also likely have to provide any information about debts you have recently paid, and any transactions such as property sales or transfers you have recently engaged in. All of this information is required, along with your medical debt, when filing bankruptcy.

The majority of people that file bankruptcy file either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. Regardless of the type of bankruptcy you file, it will remain on your credit history for seven to ten years.

Filing Chapter 7 Bankruptcy for Medical Debt

Chapter 7 is a fairly straightforward process that will last approximately four to six months. If you are successful with your case, your debts will be discharged and forgiven. You may not be able to discharge all your debts in bankruptcy. While you can typically discharge medical debt and credit card debt, expenses such as child support and alimony are typically not dischargeable.

If you want to keep certain property that is considered secured debt, such as your home or vehicle, you will have to continue to make payments after the bankruptcy case is final. You may be able to keep the property if an exemption applies to it. If you have assets that are not considered exempt, a trustee will seize it. The assets are then sold and the proceeds of the sales are used to repay the creditors. Although the law does allow for this process, it rarely happens. Property is only seized in approximately five percent of bankruptcy cases.

Not everyone filing bankruptcy qualifies for Chapter 7. To qualify, you must pass a means test which involves calculating your family income and all of your expenses. You will qualify if your income is less than the average income in South Florida, after your necessary and reasonable expenses are deducted. If your income is higher than the average income, you will have to file Chapter 13 bankruptcy to manage your medical debt.

Filing Chapter 13 Bankruptcy for Medical Debt

When filing Chapter 13 bankruptcy, your debts are not actually discharged but instead, they are organized into a repayment plan that will last between three and five years. The amount you will have to repay is based on the debt you owe, and the amount of disposable income you earn.

Still, even though you have to repay a portion of your debt, it is still possible to discharge thousands of dollars of debt that you will not be responsible for repaying. It is important to note that because a portion of your disposable income will go towards repaying your debt, you may still have to live on considerably less after the bankruptcy case is closed.

Do You Lose Your Doctor After Discharging Medical Debt?

The relationship between a doctor and their patients is an important one and many people are hesitant to file bankruptcy for medical debt because they do not want to lose their doctor. Although hospitals are prohibited under the law from denying care to a patient because they cannot afford to pay for the treatment, the same does not hold true for discharging medical debt through bankruptcy. If you discharge medical debt through bankruptcy, your doctor can use that as a reason to no longer treat you as a patient.

Our Bankruptcy Attorneys in South Florida Can Help with Your Medical Debt

If you have incurred a high amount of medical debt, our South Florida bankruptcy attorneys at Loan Lawyers are here to help. We will advise on your case, help you determine which type of bankruptcy is right for you, and guide you through the entire process so you have the best chance of a favorable outcome. Call us today at (954) 523-4357 or contact us online to schedule a free consultation and to learn more about how we can help.