COVID Medical Debt Complicates Financial Health

Nearly 1 million Americans have suffered fatal consequences since the beginning of the COVID-19 pandemic. Millions more are suffering long term effects of the illness such as severe ongoing health complications, the inability to work, and job loss. When you can’t pay your medical bills and continue to struggle with your health, options for relief are often limited to: borrowing from a family member, taking out a personal loan, or negotiating with the medical provider.

Medical Debt Relief Options

Although it is possible to take out a loan or borrow money to cover the costs of medical debts, these strategies generally make matters worse. In a sense, you are borrowing from Peter to pay Paul; creating a cycle of debt. Unfortunately, options for resolving medical debt are also limited. Besides borrowing the money, you may be able to work out a payment plan with the medical provider. However, this often does not happen without a lot of time, effort, and hassle in negotiating with the provider. Some providers may also simply refuse to negotiate, and turn to collections instead.

Fortunately, there is a solution in bankruptcy. Medical debt in bankruptcy is dischargeable in a Chapter 7 bankruptcy case. In 2016, the US Congress enacted the Bankruptcy Law Reform Act of 2016, which eliminates most medical debt as a non-dischargeable obligation in bankruptcy. The new law took effect on October 17, 2018. Chapter 7 bankruptcy is the most common way to discharge consumer medical debt in bankruptcy. In Chapter 7 bankruptcy, you give up all of your nonexempt property to the bankruptcy trustee who sells the property and distributes the proceeds to your creditors. In exchange, your creditors are required to forgive any remaining debt not covered by your exemptions.

In Chapter 7 bankruptcy, you are allowed to keep certain types of property (called exempt property) which you may not have to give up to the trustee. Contact a Houston bankruptcy attorney to learn more about property exemptions in Chapter 7 and how to eliminate your medical debt.