Can I File For Bankruptcy With COVID-19 Medical Debt?

Health problems and medical debt are a leading reason that many people across the country file for personal bankruptcy. In some cases, health issues result in insurmountable medical debt, while in other situations, health problems make it impossible to work, and debt begins to accrue. During the COVID-19 pandemic, Americans across the country have faced once-in-a-century challenges concerning public health and economic stability. Businesses in Florida and throughout the U.S. shut down to slow the spread of the infectious disease, and millions of people have suffered the effects of coronavirus infections. If you have significant consumer debt due to COVID-19 treatment in a hospital or intensive care unit (ICU), can you file for personal bankruptcy?

For most consumers, bankruptcy may be an option to manage debt related to COVID-19.

Medical Debt is Usually Dischargeable in Consumer Bankruptcy Cases 

According to CNBC, medical debt is cited in two-thirds of all consumer bankruptcy cases as a motivation for seeking bankruptcy protection. For a majority of those consumers who do file for bankruptcy to erase medical debt in whole or in part, medical debt is dischargeable. Under the U.S. Bankruptcy Code, medical debt, which is a type of unsecured debt, is not among the types of debt that cannot be discharged in Chapter 7 or Chapter 13 bankruptcy cases.

While consumers with medical debt will need to determine first whether they are eligible to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy (or in some cases where debt amounts are too high, Chapter 11 bankruptcy), it is important to know that the debt will likely be dischargeable in the case.

COVID-19 Medical Debt and Your Bankruptcy Case 

Like other types of medical debt, most kinds of medical debt accrued as a result of COVID-19 are likely dischargeable through a consumer bankruptcy case. And thousands of Americans are finding themselves with substantial medical debt as a result of a COVID-19 hospital stay, or worse, a number of days in the ICU. According to an article in BMJ, uninsured Americans are facing particularly high COVID-19 medical bills, but even consumers with health insurance are also receiving bills that total more than $10,000 in some cases.

Indeed, for some patients, the bills are substantially higher. For example, the article cites one patient who now has approximately $150,000 in medical debt “for the medical care she received after contracting COVID-19 back in March [2020], despite having private insurance with UnitedHealthcare through her employer.” That case is not an anomaly, and many consumers are trying to figure out how to contend with COVID-related medical debt on top of already existing consumer debt from credit cards, student loans, and other sources.

Contact Our St. Petersburg Bankruptcy Attorneys 

If you have questions or concerns about your eligibility to file for personal bankruptcy in order to have medical debt discharged, an experienced St. Petersburg bankruptcy lawyer at our firm can assist you. Do not hesitate to get in touch to learn more about consumer bankruptcy in Florida. Contact the Law Offices of Stephen Barszcz today for more information.

Resources:

bmj.com/content/370/bmj.m3097

cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html