The August 13 edition of the Orlando Business Journal reports that profits for Central Florida hospitals are up by 88% for 2009. The untold story is how medical debt and illness continue to be a primary cause of financial crisis for families who must resort to bankruptcy protection for their medical debts. While the health care industry in Orlando enjoyed this surge in profits, the American Journal of Medicine reported that illness and medical debt were the cause of 62% of all personal bankruptcies filed during 2007 in the United States. Most of these medical debtors were well educated, owned homes and had middle class incomes. Astonishingly, most were insured before their medical crisis. This Harvard Medical School study showed that since 2001, the number of medical bankruptcies had increased by nearly 50%.
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An underwater mortgage is a serious a problem for many Orlando homeowners. Earlier this summer, the Orlando Sentinel reported that Orlando was number 3 in the nation, and number 1 in Florida for the number of homes that an underwater mortgage – the loan balance was more than the value of the house. Many bankruptcy attorneys in Orlando have been trying to help their clients with an underwater mortgage with a procedure known as “lien stripping,” which is a form of legal surgery to remove a second mortgage lien from a homeowner’s property. Bankruptcy attorneys have used the lien stripping procedure for their clients who chose a chapter 13 bankruptcy to keep their homes with a three or five year payment plan. What has been in dispute is whether lien stripping can be performed in a chapter 7 bankruptcy.