During the current economic and health crisis, the problem of medical debt and bankruptcy has become increasingly urgent. While many Americans are facing unemployment or reduced hours on the job, a change in health care coverage, premiums or copays is making health insurance increasingly difficult to manage. Some people are simply unable to continue their health insurance altogether.

Then when tragedy strikes and a family member becomes ill, skyrocketing medical bills can upend even households that have means by eating up their hard-earned savings, forcing many to try to get by on credit.

For Louisville families, having experienced legal counsel to assess your financial state can lead to a comprehensive debt relief solution. Fortunately, there are bankruptcy solutions that can manage or eliminate medical debt when individuals are struggling just to put food on the table.

The rising cost of medical debt

According to the Kaiser Family Foundation, more than 25% of Americans were having difficulty paying medical bills in 2016. Nearly half of medical bankruptcy cases in the United States and in Kentucky are caused by medical debt where hospital bills were the greatest expense.

Sadly, more than half of Americans who are burdened with medical debt do not list any other debts on their credit reports. Medical debt cuts across age, income and education levels. Over 60% people with medical debt have attended college, nearly half are married, and of those, 20.1% are military families.

Debt relief options for medical debt

Although medical debt is classified as unsecured debt, in many cases it may be discharged during a Chapter 7 bankruptcy. A “means test” will determine whether one’s income is below the threshold for being able to repay medical debt. Even if your medical debt cannot be discharged with this type of filing, it is possible to manage repayment of this debt through a Chapter 13 bankruptcy.

In many cases, medical debt can be repaid within three to five years, often with a portion of the debt discharged. In some cases, a judgment obtained by a medical provider can be used as a lien that the court will then factor into determining whether Chapter 7 or Chapter 13 is preferable.