The problem of medical debt
Medical care in the United States is extremely expensive, and without adequate insurance it is unmanageable to most Americans. Whether it is due to a brief hospital stay or a chronic disease that requires treatments and expensive medications, most people will do whatever it takes to keep a loved one healthy, even if this means going into debt in the process.
What many New Yorkers living in Long Island and surrounding areas may not realize is that medical debt is negotiable. Medical care providers will avoid sending bills to third-party collection agencies, and they will often be willing to reduce the amount owed or work out payment plans with individuals who have fallen behind. If the debtor qualifies for Medicaid, they may also find debt relief in this way.
When medical debt becomes unmanageable
If a family member has had an accident, suddenly fallen ill, or received a serious diagnosis of disease, however, the first thing that loved ones will want to do is to get treatment for them and worry about how to pay for it later. The average hospital stay in this country is $5,220 a day, and health care costs in this country are $3.5 trillion every year.
One in four Americans experience financial instability due to medical bills, and a third delay treatments because of the cost. Nearly half of these people list hospital stays as the greatest expense, and more than half of those with medical debt do not have any other debt on their credit reports.
Finding solutions to resolve medical debt
When medical debt has eaten into life savings and the financial means to cover household expenses, credit card payments, or even the home mortgage, the problem can become unmanageable. Some solutions can include:
- Negotiating with medical providers to reduce the debt or work out a payment plan
- Filing for Chapter 7 bankruptcy
- Filing for Chapter 13 bankruptcy
Personal bankruptcy is a legal proceeding that enables individuals to manage debt or to obtain debt relief where there is personal default. A Chapter 7 bankruptcy absolves the debtor of unsecured debt, which includes most medical debt. To qualify, they must pass a means test as set at the state level that determines income level relative to median household size.
Even if they do not pass the means test, individuals may file for Chapter 13 bankruptcy, which is a debt management option that will discharge some medical debt, and manage the rest in payment installments over three to five years. Depending on your unique situation, it is important to find solutions that will help you to get beyond setbacks so you can move forward in life.