We've all heard the statistics about job loss and credit card spending, and many believe these are the main roads to bankruptcy. During the recession, many families faced extended unemployment, which led to foreclosure and enormous debt loads. Perhaps this explains why unemployment is often touted as an obvious bankruptcy culprit. Many people are surprised to learn that the most common cause of bankruptcy in America is not unemployment or credit card spending; it is medical debt. When an unexpected emergency comes up and a family is uninsured, medical debt is enough to wipe out their assets immediately. A recent report from the American Journal of Medicine said more than 60% of bankruptcy filings were directly resulting from unforeseen medical bills. Not only are these bills expensive; they also involve long-term costs that can push a family's finances over the cliff.
Is all medical debt incurred by the uninsured?
Surprisingly, many of the recent bankruptcy filings were from people who had some form of insurance, but not enough. As if the hospital bills are not enough, serious illnesses often require missed time at work for the family breadwinners, which can be debilitating all by itself. Many of the more affordable insurance policies have high co-payments, exclusions and deductibles, plus other coverage loopholes.
If you are struggling under the weight of overwhelming hospital charges, doctor bills or any other kind of medical debt, bankruptcy may be the only reasonable solution. Depending on the type of bankruptcy you choose, your bills could be eliminated entirely or significantly reduced. Of course, bankruptcy is not without its challenges. It can have a long-lasting impact on your creditworthiness and it could complicate many areas of your financial life.
Hiring a bankruptcy lawyer
There are few legal petitions that require the use of an attorney; so many bankruptcy filers feel confident representing themselves. While this may seem like the more practical choice, it is not recommended for bankruptcy. Bankruptcy needs to be handled by someone with experience handling Chapter 7 and Chapter 13 petitions. An experienced attorney will be able to show you the best way forward and protect your interests in bankruptcy court. When a medically-related bankruptcy is complete, you may find that your medical bills are either eliminated or significantly reduced.
Chapter 7 or Chapter 13 bankruptcy
Filing for Chapter 7 bankruptcy usually wipes out all unsecured debt, which includes medical debt. However, it is important to note that once you have filed for bankruptcy you may not do so again for another six years. This means that should you get sick during that time period you may be more vulnerable to legal issues and liable to pay all related bills. Most bankruptcy lawyers will recommend a post-bankruptcy strategy that includes maintaining medical insurance with full coverage.
Filing for Chapter 13 bankruptcy is another option when you are "under water" with medical bills. This type of filing will consolidated all of your debts into a manageable repayment plan. Similar to business reorganization, this option allows you to repay the bills over a 3 to 5 year time frame. While it may not be as forgiving as the Chapter 7 model, Chapter 13 allows you to hold onto most of your property. In many cases, this option is only viable for individuals with a stable discretionary income. The key benefit is the extra time it allows individuals to overcome their financial burdens.
As hospitals and providers raise their prices each year, medical bills are becoming a major issue for thousands of households. The high cost of health care continues to be the most stressful financial burden for United States citizens. If you find yourself in a predicament with excessive medical debt, a Colorado Springs bankruptcy attorney will be able to help you eliminate or reduce the amount of your bills. Contact an experienced bankruptcy lawyer for more information.
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A new trend has been spotted with regard to classification of hospital stays for Medicare patients - and it's driving up medical debt at a rapid pace.
Colorado Springs Chapter 7 bankruptcy lawyers know that medical debt is one of the driving forces for those seeking relief from bankruptcy.
The good news is a bankruptcy will erase those debts, allowing you to focus on your health, recovery and the future.
However, we still need to make consumers aware of what is increasingly becoming a driving force for some of these situations in which individuals - particularly the elderly - are owing tens of thousands or even hundreds of thousands of dollars.
It has to do with the way patients are classified when they are in the hospital. If you are considered an "inpatient," that means you have been formally admitted into the hospital. The way Medicare works is that if you stay three or more days in inpatient care, certain medications will be covered, as well as subsequent rehabilitation costs for the first 20 days, and then another $145 a day after that - up to 100 days.
However, if you are classified as "under observation" while in the hospital, or if your classification is switched at some point prior to those three days, none of that is covered. It's a technicality, but one more and more hospitals are switching to for this reason:
Hospitals get paid quite a bit less under Medicare for "under observation" patients. However, with tremendous cuts to Medicare left and right, the agency has employed a number of auditors to trim costs. Those auditors are second-guessing almost every inpatient admittance. If they determine an inpatient classification wasn't necessary, those auditors have the authority to withhold payment from the the hospital entirely.
That means hospitals are taking their chances by simply classifying patients as "under observation" automatically - no matter that it seems to violate even the basic Medicare rules and that it breaks the bank for patients, particularly those who may require longer-term treatment.
What's worse, many patients aren't even aware of it until after they've been released - when they get their bill.
Doctors say the classification won't impact the level of treatment you receive. But at the end of the day, they're interested in your physical health - not your finances.
That's where we come in.
Because reports of skyrocketing medical costs span both statewide and national news, Denver debt-relief attorneys were not surprised when a recent Centers for Disease Control and Prevention national health survey revealed that one-in-three American families are feeling the financial pinch of outstanding medical bills.
Of that same group, the CDC reports that one-in-five families are struggling to pay down their outstanding medical bills, while one-in-10 families are simply unable to pay any portion of medical debts at all.
Overall, MSNBC reports that nearly 39 percent of families with children aged 17 and younger are experiencing financial stress linked to medical care, including bills that are being paid down over time and bills they just can't pay, period.
In one notable -- if not ironic and certainly tragic -- instance, South Florida small-business owner Mary Brown, who is perhaps best known for her outspoken stance against the Affordable Care Act, is herself now seeking personal bankruptcy protection. The Kansas City-Star reports that about $4,500 of her $60,000 consumer debt is unpaid medical bills.
Meanwhile across the country, the Sacramento Bee reports that the number of Northern California hospital stays resulting in charges of $1 million or more rose from 430 in 2000 to almost 3,000 during 2010. The article spotlights three achingly-familiar storylines:
~ a gas station attendant diagnosed with liver cancer,
~ a new mom whose premature son has spent the first four-and-a-half months of his life in the hospital, and
~ the fast-food worker whose near-fatal car accident has left him $1.3 million in debt.
Hospital officials and health experts both say they expect the growth in million-dollar hospital charges to continue thanks, in part, to an exploding aging population reluctant to seek medical care until a health issue has reached a critical stage. Pair that with sharp and ongoing increases in medical staff pay; costly, necessary and frequent add-ons to infrastructure (think: high-tech/high-dollar equipment); and, the fact that hospitals charge a premium for critical-care services, and the cost-of-care boom makes sense.
Colorado bankruptcy lawyers know that for families struggling to stay solvent, health issues can be exacerbated by the stress of how to pay for them. We are here to help. For a free initial consultation with the Law Office of Stephen H. Swift, call (719) 520-0164, today.