One option for people drowning in medical debt is bankruptcy.
Anita Gloyeski, a Fort Wayne attorney specializing in bankruptcy law since 2002, said choosing the right time is important.
If financial problems are “going to be a continuing ongoing problem, sometimes I do tell (clients) to wait,” Gloyeski said.
In some cases, Gloyeski recommends filing a Chapter 13 bankruptcy, which allows the client to repay debt for three to five years while being protected from other creditors.
“Another creditor can't garnish you,” she said.
Attorney Michele Igney in Kendallville agrees.
“If you have something short term, then you can sometimes deal with that in a Chapter 13 where you can amend things and deal with other debt,” Igney said.
Chapter 13 is one type of bankruptcy, but Chapter 7 can also be used to manage and pay down medical debt. Chapter 7 allows for the liquidation of most debt, Igney said.
Medical debt incurred by a spouse is considered a financial burden both parties in a marriage are liable for – at least in Indiana.
Katie McCleary contemplated filing for bankruptcy, but said she put it off because it wouldn't solve the problem of her family's continuous medical bills.
In the U.S., “medical debt has always been the biggest reason for bankruptcy,” Gloyeski said. “If it's not direct medical bills, it's someone who takes out loans to pay medical bills.”
In Indiana, 48,000 to 64,000 people between the ages of 18 and 64 are estimated to have annual medical debt higher than $10,000, according to figures based on the U.S. Census and by the Urban Institute. Those figures represent about 1 to 1.7 percent of that population.
Allen County is one of 100 counties nationwide with the highest percentage of bankruptcies, according to a 2016 study released by Nerdwallet.
The county ranks 50th with 387 bankruptcies per 100,000 residents, or about 0.38 percent. Eight other Hoosier counties make the top 100: Lake, 18th; Porter, 25th; Clark, 33rd; Madison, 34th; Marion, 37th; Johnson, 54th, LaPorte 71st and Vanderburgh, 99th.
The kind of debt the McClearys hold is common, Gloyeski said. A cursory look through her files produced one client with $4,000 in medical debt, one with $16,000 and another with $32,000. One client with dental debt was looking at between $5,000 and $7,000 with interest, she said.
One local hospital directs patients to a bank to take out a loan to pay them off.
“Some places make you get a loan before you're seen,” Gloyeski said.
“Medical providers really push you,” Igney said. “People who haven't experienced a lot of debt before, they get scared and use their credit card, if they have it available.”
Medical debt as a rule is turned over to collections quickly, Gloyeski said.
“They give you very little time to pay. It's not like a credit card where you have a couple of years to pay it off.”
People turn to credit cards “not because they went crazy. It's because they're paying medical debt, and it shouldn't be that way,” Gloyeski said.
Doctor's offices are less likely to write off medical debt whereas hospitals will do that “especially if they can't collect,” Gloyeski said. “(The hospitals) have the ability to work with you and write off those debts. But it's up to you to pursue them and get it written off. The best time to talk to hospitals is when the patient is admitted and the financial people come around to talk to you.”
Both Lutheran Health Network and Parkview Health have programs to educate patients and help them resolve their medical bills.
“Parkview Health is committed to making medically necessary health care accessible to all patients, regardless of the patient's ability to pay,” Jessica Foor, Parkview Health public relations manager, wrote in an email response.
“If a patient is unable to pay their bill, there are several avenues to which that patient may apply for financial assistance before or after they receive care. ... Patients who complete an application, meet income guidelines based upon 200% of the Federal Poverty Guidelines and have cooperated in applying for available state or federal programs may be eligible for a full or partial write off of their hospital bill,” Foor wrote.
Lutheran has programs to assist people who are considered indigent or medically indigent, Geoff Thomas, Lutheran's public relations supervisor wrote in an email response.
“Qualification for an assistance program can result in care at reduced or no cost to the patient,” Thomas said. “If they have insurance or other coverage, we ask patients to work with us as we seek payment from those sources. Lutheran Health Network makes financial counselors available to all its patients to help them understand their unique circumstances and to identify possible resolutions for their particular situation.”
Gloyeski has had personal experience with medical debt.
In 2010, Gloyeski said she incurred more than $100,000 in medical debt after she delivered her son, who was in NICU, and her husband had lost his job.
“I did bargain down bills and I didn't get insurance for my son until he was almost a year old. I settled for $7,000 cash for a bill that cost $14,000. I always ask for a cash discount,” Gloyeski said. She has settled the larger bill, too.
Ignoring medical debt has consequences, Igney said, putting up to 25 percent of an individual's wages in the hands of a single or multiple creditors. Normally, the garnished wages go to a single creditor, she added.
“If a creditor gets a judgment against you, they can garnish your wages and haul you into court over and over,” Gloyeski said.