After having represented consumers with financial problems for over twenty five (25) years, I can state conclusively that medical bills are one of the biggest causes of bankruptcy. The relationship between bankruptcy and health care is well documented. A Harvard University Study conducted in 2001 and reported in 2005 concluded that 2 million Americans (including 700,000 children) are affected by medically driven bankruptcies each year. It makes sense – people who are sick or injured are often unable to earn sufficient income to pay their bills. This being the case, I find it necessary to evaluate a person’s ability to pay for their medical related expenses when I look at their overall financial health (no pun intended).
Many of the people that I counsel these days are without health insurance. No matter how significant these people’s financial problems may be, I am very hesitant to suggest that they file a chapter seven straight bankruptcy. My concern is that once I file a chapter seven straight bankruptcy, there is an eight (8) year waiting period before I can file another such bankruptcy in which they will be entitled to a discharge. The worst thing imaginable is that I file a chapter 7 bankruptcy for an individual and then she becomes sick or is injured the next day. If she doesn’t have health insurance, she will likely be overwhelmed by new medical debt and have no reasonable bankruptcy option.
If you are without health insurance, it may be best to wait until after you find coverage before filing bankruptcy. Some people, of course, cannot wait. They may be facing a wage garnishment or imminent foreclosure. They need immediate protection. If this is the case, I often suggest that the individual or couple file a chapter 13 bankruptcy. The chapter 13 bankruptcy allows a debtor to obtain protection and propose a plan to restructure and pay back all, or a portion, of their debt. A chapter 13 bankruptcy also offers more flexibility. If new medical bills, or other debt, accumulate; the debtor may be able to dismiss and re-file a new bankruptcy. In certain circumstances, the bankruptcy can be converted to a chapter 7 bankruptcy. I like to tell my clients that chapter 13 allows them a “do over”. Those of you who are golfers may think of this as a mulligan.
In any case, it is important that you meet with an experienced consumer bankruptcy attorney who will help you to evaluate your best course of action. Not all people with financial problems are alike. In our conveniently located offices, our experienced attorneys will advise you just as if you were a member of one of our own families. Our biggest source of new business is referrals from people that we have helped in the past. We take great pride in the work that we do. If we can be of assistance to you, please don’t hesitate to call and schedule a free initial consultation. Together, we can find the best solution.
Brad Botes is a principal of each of the Bond & Botes Law Offices throughout Alabama, Mississippi, and Tennessee. He holds a Bachelor of Science from the University of North Alabama, and a Juris Doctorate from Cumberland School of Law at Samford University. He and his team of bankruptcy lawyers have spent over 30 years guiding people through financial challenges. Read his full bio here.