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Debt-relief solutions for unpaid medical bills

On Behalf of | Feb 3, 2022 | Bankruptcy |

The problem of medical debt is not going away, and in fact has become a more pressing issue for many people in Illinois and elsewhere who are experiencing severe health issues. For those who have had a change in health care coverage, premiums, or copays, health insurance has become more difficult to afford, and some people are simply no longer able to pay for their current health care plans.

Without insurance, when a family member gets sick, the medical bills and treatments will eat into hard-earned savings and force them to try to get by on credit. For residents of Geneva and throughout Northern Illinois, an assessment of their financial state can help discover debt relief solutions that will also manage or eliminate medical debt.

The pervasive reality of medical debt

More than one in four Americans have difficulty paying medical bills, and nearly half of all bankruptcy cases are due to medical debt where hospital bills were the greatest expense. The average cost of a hospital stay in America is $5,220 per day. As debt becomes unmanageable, people cut back on basic needs such as food, clothing and other household necessities.

In fact, more than half of people who have medical debt do not list any other debts on their credit reports. Medical debt cuts across class and income status. More than 60% of individuals with such debt have attended college, nearly half are married, and one in five are military families.

Discharging or managing medical debt through bankruptcy

During Chapter 7 bankruptcy proceedings, medical debt falls under the category of unsecured debt. A means test will determine if one’s income falls below the median household income of a similarly-sized household in Illinois, in which case such debt would be discharged. Even if an individual’s income does not fall below this threshold, however, a Chapter 13 filing would help to manage the repayment of some, if not all, of the medical debt.

In many cases, a repayment plan can resolve most medical debt within three to five years, with a portion of the remainder being dischargeable. In some cases, a medical provider may obtain a judgment to use as a lien that the court will factor in when determining whether Chapter 7 or Chapter 13 is preferable.