Unexpected Medical Bills Can Ruin A Family’s Finances
Medical Bills Are the Biggest Cause of Florida Bankruptcies
Unexpected medical bills can bury an average West Palm Beach family and, according to a recent Kaiser Family Foundation report, approximately one-third of Americans report having difficulty paying their medical bills.
Medical bills can happen to anyone. About four out of 10 non-elderly adults who earn less than 200 percent of the federal poverty level report problems paying medical bills. However, it is not just people who have low incomes that have problems paying off medical bills. In fact, according to one source, the uninsured account for about 30 percent of medical debt cases, whereas those with employer-sponsored health insurance account for 54 percent of medical debt cases. Additionally, individuals with higher deductible health plans are more likely than those in lower-deductible plans to report difficulty paying their medical bills.
In addition to the problem of medical debt, people who experience significant health problems also often have to deal with other related problems, such as the loss of a job or reduction in income. This, in turn, creates a situation where the individual or family can no longer pay bills that they otherwise could have afforded. It also creates a situation where the individual or family depletes savings, borrows from relatives, or suffers damaged credit.
Health problems can also create a situation where the volume of bills coming in from a major health event becomes overwhelming and the family can no longer track what has been paid, what has been owed, and what has been transferred to collections.
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Medical Bills And Collections
When medical bills are not paid, they are usually turned over to a collection agency; typically, when hospitals and other healthcare providers are not paid within 90 days of invoice, the unpaid bill is referred to collections. In one study, medical bills accounted for the majority of debts referred to third-party collection agents and 17 percent of all debts that were re-sold in the debt-buying industry.
Having a medical debt referred to collections often results in a significant credit score reduction. With poor credit, individuals with outstanding medical bills also often face difficulties qualifying for mortgages, auto loans, and other consumer credit. A poor credit rating also can create problems with obtaining new employment and even basic services such as utility service, telephone or cable service, or insurance.
While individuals with medical debt often have their credit score negatively affected by the debt, a new study from the U.S. Consumer Financial Protection Bureau (CFPB) has found that people who owe medical debts are over-penalized by this debt. This is because people with medical debt generally pay their medical bills at the same rate as people with higher scores. Unfortunately, as pointed out by the CFPB study, at the present time, most credit bureaus do not distinguish between medical and non-medical debts, and individuals with medical debt are left trying to figure out how to regain their financial footing.
Bankruptcy As An Option For Medical Debt
Although the Affordable Care Act may help some Americans avoid huge medical costs, many others Floridians are still dealing with unmanageable healthcare bills. If medical bills are preventing you from paying off your other household bills, such as your mortgage, credit cards, car loans, or other living expenses, filing for bankruptcy can be an option for getting back on your feet financially.
Individuals usually choose between Chapter 7 and Chapter 13 bankruptcy. A Chapter 7 bankruptcy can completely eliminate unsecured debt, including medical and healthcare bills. A Chapter 13 bankruptcy reduces some debts and eliminates others, while allowing you to keep your house in many cases. It allows you to create a repayment plan where you pay off your debts over a three to five year period under terms that you can reasonably afford.
Contact the West Palm Beach Bankruptcy Lawyers at Kelley, Fulton & Kaplan
If hospitals, clinics, or other health care providers are trying to collect debts that you are just not able to pay due to your current financial situation, contact the Law Offices of Kelley, Fulton & Kaplan We can help you put an immediate stop to any collection actions, including harassing letters or phone calls, wage garnishments, or frozen bank accounts. Contact us today at (561) 404-8944 to discuss your medical or dental debt with our experienced West Palm Beach bankruptcy lawyers.