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Innovative startup wants to relieve medical debt load

Unpaid medical bills burden many Florida residents, especially those without insurance, but also people who have insurance with high deductibles and copays. A startup company called Better was formed to help people address out-of-network medical expenses, and it has announced that it intends to apply its proceeds to settling medical debt for people who cannot pay.

Although the organization's stated goal of resolving $16 million in medical bills sounds ambitious, the company can buy medical debt at a fraction of the original costs charged to patients. The company partners with RIP Medical Debt, which negotiates with billing agencies to reduce the amounts owed. After Better makes a debt purchase at a reduced rate for a person who cannot pay, it applies its revenue to the debt so that it is forgiven. Its financial model calls for it to receive 10 percent of amounts that patients ultimately receive back from their insurers.

Surveys frequently identify medical debt as the top cause of bankruptcy filings. In 2015, medical expenses in the country exceeded $3 trillion, and over 40 percent of people lack the means to pay these bills. One study found that these debts involve one in every five people.

When medical debt leads to financial stress, filing for bankruptcy could offer a viable path to a fresh start. An attorney could evaluate a client's income and expenses and determine which particular chapter might be available. The two primary methods of consumer bankruptcy are Chapter 7 and Chapter 13, and an attorney can describe how each one is designed to work.

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