The #1 Cause of Bankruptcy in Arizona — Medical Debt

medical debt blog

When you are facing medical debt, it is easy for the bills to quickly become too much for you to handle.  Thus, no one wants to admit that they are in over their heads financially.  It’s tough to realize it yourself, much less tell family and friends. However, there is no easy way to sustain outstanding medical debt.  Thus, bankruptcy is often the best debt relief solution.

Far too many people in Arizona drain their savings and retirements trying to service the high medical debts.  These debts can quickly become too much to pay.  Thus, it is easy to see how a medical emergency or unexpected illness can quickly lead to financial instability.  However, there are ways of handling medical bills and emergency services without sacrificing your retirement or your future.  Our Phoenix bankruptcy lawyers have worked with many individuals and families in Arizona struggling under the weight of medical bills. Therefore, when a medical bankruptcy is the right path for you, our Arizona debt relief team is here to be your guide.

Does Filing Bankruptcy Get Rid of Medical Debts?

Fortunately, most debt incurred from medical and hospital bills is unsecured debt (much like credit card debt) and can be discharged in a bankruptcy.  You’ll be able to alleviate your medical debt in both a Chapter 7 and Chapter 13 bankruptcy.  Which Chapter of Bankruptcy you file depends upon your individual circumstances and what is best for you and your family.  Thus, our experienced Arizona Bankruptcy Attorneys would be a great help in determining the best Chapter for you to file.

Why is Medical Debt So Insurmountable?

Unpaid medical bills go into collection and are reported on a person’s credit for 7 years.  After that, the collection and the debt fall off of the credit report.  However, the money is stilled owed for the unpaid medical bills and is still able to be collected.  Thus, this is another reason that medical debts increase and become insurmountable.  Since they don’t just go away and are still owed even after they fall off your credit, they increase and increase to the point that they are usually not serviceable by the debtor.
There are several issues can lead to medical debt becoming overwhelming.  Medical debt is very expensive.  From rare and serious diseases, including cancer, to unexpected pandemics like Covid-19, each require on-going and expensive care. Additionally, a medical emergency, like a car accident or a sporting injury, could lead to multiple severe injuries that require significant immediate care, such as surgeries, and on-going treatment. Many of these medical possibilities are unexpected and it is doubtful that a person would have enough saved up to cover the high cost.
Also, there is the non-ability to be able to work.  Many are unable to work as regular on the heels of an accident or serious illness.  This further complicates the situation and leads to a greater hurdle when dealing with medical debt. Losing your job compounds the cost of injuries and illnesses. If you’re seriously hurt in a wreck or going through chemotherapy and radiation, it’s probably difficult, if not impossible for you to work.  Many people in Arizona, (an estimated 40-44%) lost income due to their illness.

Medical Debt Impacts Everyone

Medical debt in Arizona overwhelms people of all incomes and occupations. Thus, it is not something that only happens to people with a lower socioeconomic status or those without insurance. In fact, the majority of people who file for bankruptcy in Arizona because of medical debt had some form of health insurance. Plus, most were well-educated, owned their homes, and had what are considered middle-class jobs.

Are Your Medical Bills Too Much?

Is it time for a change?  Are you ready for a “Fresh Start”?  Thus, if you can’t make the minimum payments on your bills each month because of medical expenses and your debt continues to increase, it may be time to talk to our bankruptcy lawyers and see what debt relief options are available.
One of the most concise ways to eliminate medical debt is  bankruptcy.  Bankruptcy is a legal process that allows you to either eliminate or restructure debt.  Thus, eliminating your debt, it is Chapter 7 bankruptcy that you want to consider.  Chapter 7 bankruptcy is also known as a liquidation bankruptcy. There is also the option of a Chapter 13 bankruptcy.  Chapter 13 is also referred to as a reorganization bankruptcy.  In a Chapter 13 bankruptcy, you pay back a portion of the debt that you owe.  The repayment amount is dependent upon what you can afford.  However, which Chapter of bankruptcy you should file for depends on your circumstances and whether you qualify for liquidation.

Fortunately, in either type of bankruptcy, medical debt can be eliminated. Plus, as long as you’re eligible for Chapter 7 bankruptcy, there’s no limit to how much medical debt the court can discharge. Also, if you go through Chapter 13, you’ll repay some of your medical debt over a 3-5 year Ch 13 payment plan. Lastly, at the end of your repayment plan in a Chapter 13, the bankruptcy court discharges any remaining medical bills.

There are pros and cons to each type of bankruptcy. Chapter 7 is best suited for individuals with little-to-no income. Whereas,if you have a steady job and want to keep as much of your property as possible, perhaps a Chapter 13 might be the better option.

Our Arizona Zero Down Bankruptcy Lawyers Can Help

Whether you’ve decided to file for bankruptcy or simply want information on your debt relief options, contact Arizona Zero Down Bankruptcy Lawyers today.  Our experienced Phoenix bankruptcy lawyers will talk with you about your income, the property you own, and how much debt you have. (Both Medical and Other Debt).  Additionally, our AZ Debt Relief Team advises you on whether bankruptcy might be the right option.  Medical debts can strike at any point and without warning.  Therefore, if you are ready for a “Fresh Start” contact us right away.