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Is it possible to get debt relief for medical treatments?

On Behalf of | Jul 1, 2021 | Bankruptcy

Many people have been struggling to make ends meet during a difficult economy, and this situation has unfortunately also left millions of Americans with mounting medical debt with no way to pay it off. And for Texans who have fallen ill or had to take care of a loved one, a change in copays or reduced or interrupted health coverage can make medical costs impossible to repay.

When tragedy strikes with a family member falling ill, mounting medical treatments and hidden charges can destroy a family’s hard-earned savings, forcing them to get by on credit.

For Texans who are seeking effective solutions to their financial difficulties, getting trusted legal advice on debt relief options can be an important first step toward creating a comprehensive relief strategy. And there are bankruptcy solutions that address medical debt or to manage unsecured debt over time.

Are many Americans facing medical debt?

People across the United States have faced challenges in being able to pay off medical expenses for some time. According to the Kaiser Family Foundation, over 25% of Americans faced challenges in managing medical debt in 2016, leading many to cuts back on food, clothing or other basics to manage the debt.

In nearly half of all medical bankruptcy cases, hospital bills are cited as the greatest expense. Medical debt affects all age groups regardless of education or income level. More than 60% of Americans who have medical debt have attended college, nearly half are married, and of those, 20% are military families. Over half of people who have medical debt do not list any other debts on their credit reports.

What debt relief options are there?

Medical debt is classified as unsecured debt which may be discharged during a Chapter 7 bankruptcy filing. A means test determines whether a debtor’s income falls below the threshold, set by Texas statute, for being able to repay medical debt. It also examines the debtor’s other assets to determine whether or not they have the disposable income to be able to repay a portion of the debt.

Even if you do not qualify for Chapter 7, a Chapter 13 bankruptcy will restructure debt so that the debtor can manage debt repayment over time. Often, medical debt can be repaid over a period of three to five years, with a portion of the debt being discharged as well. If a judgement lien has been obtained by a medical provider, the court will factor this into deciding whether a Chapter 7 or Chapter 13 is advisable.