Medical debt is a serious problem that plagues millions of people throughout the U.S. In 2020, surveys conducted by Credit Karma and Debt.com found that the average American has over $2,000 in medical debt, and a substantial portion of the population has medical debt of $10,000 or more. High unemployment rates during the COVID-19 pandemic have exacerbated the issue, as many people have lost employer-sponsored health insurance coverage.
If you are struggling with medical debt, chances are that you are also facing financial hardship in other areas of your life, including difficulty keeping up with mortgage and credit card payments. If so, you may be wondering about your options for relief, including the possibility of filing for bankruptcy.
Reducing Medical Debt Without Bankruptcy
It is important to note that there are often other options for addressing your medical expenses without resorting to filing for bankruptcy. For example, you can attempt to negotiate your bills with your healthcare provider, which may result in a reduction of the costs or the creation of a payment plan that allows you to make manageable payments over time. You may even qualify for a financial assistance program offered by your provider based on your income and assets.
It is also worth reviewing your bills to ensure that you have only been charged for the expenses that you truly owe. An attorney can help you identify any billing errors or expenses that should have been covered by your health insurance provider.
Discharging Medical Debt Through Bankruptcy
If none of the above options meet your needs, or if you need to pursue more comprehensive debt relief, filing for bankruptcy may be the best course of action. Unlike other types of debt, including taxes and student loans, medical debt is dischargeable through bankruptcy.
If you qualify for Chapter 7 bankruptcy, any remaining medical debt can be discharged after liquidating non-exempt assets in order to pay creditors. Filing for Chapter 7 bankruptcy can provide relatively fast relief, and in New York, it is often possible to do so without losing your home and other important assets. Chapter 13 bankruptcy, a more widely available option, allows you to negotiate a payment plan to reduce your debts over three to five years. Any remaining medical debt after this time period can then be discharged.
You should be aware that bankruptcy will remain on your credit report for up to 10 years, which can affect your ability to obtain credit in the future. However, if you are the subject of collection actions related to your medical debt, this will also damage your credit. In this case, the pros of bankruptcy may outweigh the cons.
Contact a Hudson Valley Area Bankruptcy Attorney
At the Law Offices of Robert S. Lewis, P.C., we can review your medical debt and help you understand your options for relief. If bankruptcy is the best choice, we can guide you through the process and help you understand what will be expected of you. For a free initial consultation, contact our Rockland County bankruptcy lawyer today at 845-358-7100.