Chapter 13 Bankruptcy in Louisville & Unmanageable Medical Debt

The surging cost of medical care has left many people with essentially two options: either forgo treatment (which a growing number or doing) or take on debt. doctor.jpg

Often, the sticker shock of the bill can seem more frightening than the ailment!

A Chapter 7 or Chapter 13 bankruptcy in Louisville can help.

In fact, our experienced Kentucky bankruptcy lawyers know medical bills are the leading cause of bankruptcy filings. A recent report by the American Journal of Medicine indicates that of the roughly 1.5 million Americans who file for bankruptcy, a whopping 60 percent of those were individuals whose financial ship was capsized by medical bills.

It was a trend on the rise even before the recession. In the six years between 2001 and 2007, bankruptcies that were attributable to out-of-control medical bills spiked from 46 percent to 62 percent. That’s huge – almost 50 percent – for such a short time frame.

And Americans as a whole were doing relatively well at that time. That’s changed drastically since 2007, since the housing market crashed, causing a global recession that continues to reverberate.

We’re not talking about people who were reckless with their money or careless about paying their bills. The social scientists who explored this issue discovered that bankruptcies fueled by medical costs were filed by well-educated, middle class folks. The average amount they owed was around $18,000. For those who didn’t have insurance, it was closer to $27,000. Many tried to mortgage their home to pay, but it was tough when they had often lost a great deal of income due to the fact that they were battling illness.

It says something about the overall state of health care when anyone is just one illness away from financial ruin. In fact, nearly 80 percent of those who sought bankruptcy protection did have insurance. The problem was the huge gaps in covered expenses, including things like co-pay, deductibles and services that weren’t covered.

This is especially a big issue for young people. A recent story in CNN Money indicated that more than 40 percent of adults between the ages of 19 and 29 will opt not to receive medical care because of the cost. They won’t get their prescriptions filled, they avoid doctor visits and they won’t get specialist care – even if they really need it.

Of course, the problem with this long-term is that when they avoid valuable screenings or preventative care measures, the cost may end up being much higher later, when issues have exacerbated.

Nearly 40 percent of that age group has said they have trouble making payments on their medical debt, and another 43 percent said they had to deplete their entire savings to do so. More than 30 percent relied on credit card debt and 28 percent said they tried to pay it off – but then weren’t able to afford the basics like rent and food.

There is a better way.

11 U.S.C. 109 (e) of the federal bankruptcy code allows that any individual whose unsecured debts are less than about $360,500 and whose secured debts fall below $1.1 million may qualify for a Chapter 13 bankruptcy. (These amounts are periodically adjusted, but the majority of Americans are going to qualify under Chapter 13; there are other options for individuals whose debt-to-income ratio may be even higher).

If you need to speak to a Kentucky bankruptcy attorney or Louisville foreclosure defense firm, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.

Additional Resources:
Young adults skip health care as medical debts rise, By Emily Jane Fox, CNNMoney

More Blog Entries:
Louisville Bankruptcy Watch: Too Broke for Bankruptcy?, May 10, 2012, Louisville Bankruptcy Lawyers Blog

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