Eliminating Medical Bills Through Bankruptcy
Medical expenses have proven to be the most common reason for people filing bankruptcy in the United States. The Centers for Medicare & Medicaid Services reported that national health expenditure (NHE) grew 4.6% to $3.8 trillion in 2019, or $11,582 per person, and accounted for 17.7 percent of Gross Domestic Product (GDP) while out-of-pocket spending also grew 4.6% to $406.5 billion in 2019 or 11 percent of total NHE.
A 2007 study published in the American Journal of Medicine reported that 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income, and the rest met the criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills, and three quarters had health insurance. CNBC reported in February 2019 that another study from academic researchers found that 66.5% of all bankruptcies were tied to medical issues – either because of high costs for care or time out of work—and an estimated 530,000 families turn to bankruptcy each year because of medical issues and bills.
“At The Sparrow Law Firm, we recognize that each case is uniquely different.”
Houston Medical Bills Attorney
If you are struggling to pay medical bills, filing Chapter 7 or Chapter 13 bankruptcy could be a solution to many of your issues. You will want to make sure you consult The Sparrow Law Firm on the best methods forward for yourself.
Our firm will be able to take everything into account in your case and help you determine the strongest possible way to overcome your medical debt. We will be able to sit down with you and really discuss everything you are dealing with when you call 281-973-0431 or contact us online to schedule a free consultation.
Identifying Errors Is Important
When a person is overwhelmed with medical bills, it is always recommended that you identify any errors in the bills. Consider taking these actions:
- Compare your bill to the estimate you received – Before any appointment, reach out to your health care provider and request a billing code and cost. Then, tell your provider to verify the procedure or treatment is covered by your insurance and request an estimate of what it will cost. If the estimation is wildly different from the amount you owe, it could be the result of a billing mistake.
- Assemble a list of your expenses – Make sure you have a detailed list of every service and supply you received with their respective costs.
- Double charges – While reviewing your list, make sure that the same charge does not appear multiple times. This could be the result of a data entry error.
- Watch for upcoding – Upcoding, the act of falsely reporting a diagnosis to collect a bigger profit, is something that shady health care providers do to earn extra income. If your billing statement includes costs you never experienced, it may be because of upcoding.
- Review identifying factors – When you receive your billing information, make sure the billing information is for you. It may be possible that you received a bill for a person with the same name as you or a similar one. Misidentification can result in coverage and billing discrepancies.
When there are charges to be disputed, contact your health care provider’s billing office, call your insurer, contact a credit-reporting agency, or consider submitting credit complaints.
Chapter 7 And Medical Bills
Chapter 7 is the kind of bankruptcy that most people imagine, a case in which all debt is discharged with no obligation to repay anything. The process lasts about six months.
Not all debts in a bankruptcy case can be discharged, as debts such as income taxes, past-due child support and alimony will not be discharged and survive the bankruptcy case. Student loans are rarely forgiven and may only be discharged under very narrow circumstances.
With secured debts such as car loans and mortgages, a person will have to continue making payments after the bankruptcy case is over if they intend to keep the property. Medical bills are not considered secured debts.
In Chapter 7 cases, debt is typically broken down into four categories:
- Secured debts – A creditor has a secured debt if it has a lien on the property and can repossess or foreclose on it if a person fails to make loan payments. The debt is deemed to be “secured” by the property that acts as collateral. Mortgages and car loans are the most common examples of secured debts.
- Unsecured debts – Debt not secured by a piece of property is unsecured debt, and unsecured debts are further divided into priority and nonpriority categories.
- Priority debts – Priority debts typically cannot be wiped out by bankruptcy and get paid before most other debts in Chapter 7 bankruptcy. Examples of priority debts include certain taxes and domestic support obligations such as alimony or child support. Medical bills are not a priority debt.
- Nonpriority general unsecured debts – Nonpriority general unsecured debts are the last to get paid in Chapter 7 bankruptcy. Most nonpriority unsecured debts, such as credit card bills, unsecured personal loans, and medical debts, are discharged without any repayment in bankruptcy.
Chapter 13 And Medical Bills
When a person files for Chapter 13 bankruptcy, they will enter a three- to five-year repayment plan. The repayment plan allows the creditor to still receive some of the money they were seeking but the debtor may complete the terms of their plan and satisfy their debt obligation even though they paid thousands of dollars less than what was originally sought.
The one big catch with Chapter 13 is that medical debt cannot exceed a certain amount. To file for Chapter 13 bankruptcy, a person must have no more than $394,725 in unsecured debt and no more than $1,184,200 in secured debt.
A debtor will also need to have a regular income to file Chapter 13. A person must pay a certain percentage of their unsecured debts through their repayment plan, and the amount will depend on various factors including the debtor’s disposable income and how much their unsecured creditors would have received had they filed for Chapter 7 bankruptcy, but at the end of the repayment period, the remaining balance on the secured debt is discharged.
Many people express concerns about how filing bankruptcy will impact their relationships with their health care providers. Keep in mind that the Emergency Medical Treatment and Labor Act (EMTALA) is a federal law that requires anyone coming to an emergency department to be stabilized and treated, regardless of their insurance status or ability to pay.
The truth is that many doctors could have the right to refuse treatment to a person who discharged previous debt through bankruptcy, but it is not all that common. Most will be happy to retain their patients, but people who do encounter difficulties obtaining treatment after a bankruptcy filing may have to find a new health care provider.
Texas Medical Bills Resources
Texas Health Resources – Texas Health Resources is a faith-based, nonprofit health care system dedicated to its mission of improving the health of the people in the communities it serves and maintains a policy to provide care for individuals in need of financial assistance. In general, patients with gross family income at or below 200 percent of applicable federal poverty guidelines who lack sufficient funds to pay their bills may be eligible for financial assistance. In addition, patients with significant Texas Health hospital bills and income above 200% of applicable federal poverty guidelines may also be eligible for aid.
Help with Bills | USAGov – Learn how to find help from the government with medical bills and insurance options. Find information about Medicaid and CHIP (Health Care for Children), Social Security and Medicare, and Medicaid for adults. You can also learn more about health insurance through the health insurance marketplace.
Contact A Medical Bills Lawyer In Houston | The Sparrow Law Firm
Do overwhelming medical bills have you now considering bankruptcy? You will want to seek the help of The Sparrow Law Firm before filing for Chapter 7 or Chapter 13 bankruptcy.
Our firm can fight to help you get all of your medical bills discharged so you can move on with your life. Call 281-973-0431 or contact us online today to let us review your case and talk with you about what you can do during a free consultation.