Will A New Kind Of Health Care Debt Impact Bankruptcies?

Medical debt is one of the most common reasons that individuals file for bankruptcy. Even when South Florida residents have health insurance, they can still end up paying a significant amount of money out of pocket and can owe a substantial amount of money in hospital bills and other related costs for an unexpected medical issue or for a medical emergency. Recent data from the Kaiser Family Foundation (KFF) suggests that about 10 percent of Americans currently have medical debt and owe more than $10,000. Many of those people are “in poor health” and are “living with disabilities.” Yet for a portion of those debtors, medical facilities are not charging significant amounts of interest. As such, even if medical debt loads are high, the total amount of a person’s debt may not be increasing significantly due to interest (as with credit cards).

However, according to a recent report from NPR, that practice has changed at many health care facilities. Indeed, many hospitals and other medical facilities are now “offering” lines of credit to patients that come with interest, just like various types of credit cards. It is important to learn more about how this type of medical debt is accruing, and to understand the options that debtors have when they owe medical debt on hospital lines of credit that are charging interest.

Health Care Credit Cards? Medical Debt is Rising, and So is Interest on Medical Debt 

Medical debt in America is not new. However, as the NPR report explains, what is relatively new is a practice that is taking hold at health care facilities and hospitals that involves paying for health care on a hospital-specific credit card or credit line. Unlike previous payment plan options offered by health care facilities, patients are now required to “consolidate health expenses” or agree to medical “financing options” in order to pay for health care, and these new “options” come with interest.

Indeed, as the report underscores, health care facilities and hospitals are making more money while patients are going into more debt.

Medical Debt is Typically Dischargeable in Florida Bankruptcy Cases 

While the NPR report makes clear that many patients are experiencing rises in medical debt as a result of billing and “lending” practices from hospitals and health care facilities, it is essential for Florida residents to know that the source of the medical debt does not usually impact whether or not the debt is dischargeable in a bankruptcy case. In other words, whether you owe medical debt on a no-interest plan or have agreed to a hospital credit card where you charged your medical debt, it is likely going to be dischargeable if you file for bankruptcy.

To determine whether your debt is dischargeable, you should have a bankruptcy lawyer assess your circumstances.

Contact a West Palm Beach Bankruptcy Attorney Today 

For many South Florida residents, medical debt is a reason to file for personal bankruptcy. If you have questions about filing for Chapter 7 or Chapter 13 bankruptcy with medical debt, one of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller can talk with you about your circumstances and can advise you on your bankruptcy options. We have years of experience representing clients in bankruptcy cases in Florida and can speak with you today.

Sources:

kff.org/health-costs/press-release/1-in-10-adults-owe-medical-debt-with-millions-owing-more-than-10000/

npr.org/sections/health-shots/2022/11/17/1136201685/medical-debt-high-interest-credit-cards-hospitals-profit