Is Healthcare Debt Really The Leading Cause Of Bankruptcy For Floridians Today?

By  //  January 3, 2020

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In early 2019, Jose Oliva, Florida House Speaker, put forward his theory that healthcare debts were the main reason that Americans today experience high outstanding levels of debt.

In early 2019, Jose Oliva, Florida House Speaker, put forward his theory that healthcare debts were the main reason that Americans today experience high outstanding levels of debt.

In his statement for the Associated Press legislative day, he said that Floridians today are primarily financially controlled by healthcare expenses. 

Back in 2009, President Obama declared that healthcare costs were causing one bankruptcy in the USA every thirty seconds. It’s no wonder, then, that medical bankruptcy represented such a regular talking point when discussing the Affordable Care Act.

However, now that Medicaid expansion has been rejected by the Republican-led legislature, what does this mean for Floridians who are facing high medical bills?

Is it true that the majority of people seeking advice from a bankruptcy attorney in Orlando are in dire financial straits due to the expense of paying for their treatment, or are there other reasons for their money problems?

How Many Bankruptcies Are Due To Illness?

A research paper from 2005 showed that almost 30% of all bankruptcies were attributable to injury or illness alone. When taking additional factors like lost income because of illness, unpaid medical expenses and mortgaging properties to cover medical bills into account, that figure increased to 46.2%.

A few years later in 2009, the research was updated. In just this short space of time, it revealed that almost a fifth more people (62%) now believed that medical bills and illness had been a major factor in their bankruptcy. 

Why Does Medical Debt Result In Bankruptcy?

It’s never easy to precisely determine the cause of any bankruptcy. Some people may attribute their financial problems to their medical issues without mentioning how they mismanaged their money.

Yet, it’s very easy to see how medical debts can cause the average Floridian family to experience major monetary difficulties. 

Research into the number of bankruptcies caused directly by medical debts often only includes hospitalizations. However, families can still experience serious financial issues without being in hospital.

An accident can result in hours spent in the ER, followed up by several months of follow-up appointments and physical therapy. If someone is diagnosed with a chronic condition like asthma or diabetes they may require lifelong drugs that cost thousands of dollars. 

How Can Declaring Bankruptcy Help Those In Medical Debt In Florida?

For anyone in Florida who is unemployed, lacking medical insurance or simply lacking sufficient coverage to pay for all their treatment costs, a single visit to the ER can cause financial ruin.

Medical bills can run into the tens of thousands and with a limited household income, it can be impossible to cover the payments. Declaring bankruptcy can be the best option to wipe out medical debts. 

Any debtor filing for bankruptcy in Florida can wipe out or discharge all their outstanding medical bills when they obtain their discharge from bankruptcy.

This means that debt collectors won’t be able to harass them, call them or try to collect the outstanding amounts owed and that were listed in the debtor’s bankruptcy petition. 

With this in mind, it’s not too surprising that two-thirds of people who filed for bankruptcy in the USA stated that medical debt was the leading cause of their financial downfall.

As evidence shows that only 40% of people in America have enough savings to cover a medical bill of just $1,000 it seems clear that the situation is going to get worse before it gets better.