Should You File Bankruptcy on Your Medical Debt?

Posted on Aug 19, 2016 By Amy Tanner

Bankruptcy Decatur Amy TannerFor many Americans, the answer to this question should be yes! Medical debt is currently one of the leading reasons that people file for bankruptcy. I see that in my day to day practice and, if I am ever asked to pinpoint the main reason people file for bankruptcy, one of my top answers is medical bills.

American’s Have Trouble Paying Medical Bills

A recent publication by Demos, a public policy organization, cites a survey that found 26 percent of Americans between 18 and 64 have problems paying medical bills, with the uninsured more likely to report having difficulty than the insured. Many of the people reporting difficulty with medical debt stated it had a “major impact” on their family.

Medical Debt Bigger Burden than Credit Card Debt

Demos launched its own study of national household surveys among low and middle income households and found households that have medical debt struggle more with credit card debt also and the households carrying medical debt on their credit cards are more financially strained. Even if you are insured, many out of pocket expenses, such as co-pays, deductibles and prescriptions go on credit cards. The survey also found that households that have medical debt reported a higher Annual Percentage Rate (APR) on their credit cards, an average of 16.75 percent, compared to an average of 15.47 percent from those who reported no medical costs.

A leading contributor to household medical debt are dental expenses, as many basic insurance coverages don’t include a dental plan. Although hospital stays and doctors office visits showed some of the lowest percentage of medical debt issues in this particular survey, these are two areas that I notice in my own practice as being factors that lead people to seek bankruptcy advice. One uninsured or underinsured hospital stay can result in an extremely large bill that most working Americans cannot even begin to tackle. A large hospital bill can easily be a driving force for a person to seek bankruptcy advice. For most folks, a hospital bill or emergency room visit is unforeseen and many are not financially equipped to deal with such a bill.

Putting Themselves in Danger

Unfortunately, many Americans are doing without the healthcare and medications they need because they can’t afford them and are fearful of taking on too much medical debt that they cannot afford. The study reported that most will choose to skip a visit to the doctor or clinic in order to avoid incurring another medical bill. The worry for most is that issues go undiagnosed and, what might be a simple medical fix if caught early, is put off until it becomes worse. This usually ends in a more expensive, and probably unplanned, medial expense. Contrary to what a lot of folks believe, hospitals and other medical creditors can sue you and eventually garnish your wages. In fact, medical providers can be some of the most brutal and harassing debt collectors we see. If you are already suffering physically, the added stress of the medical bill and medical collectors can be overwhelming.

If you are feeling overwhelmed with medical bills or being harassed or garnished by medical collectors please call our office nearest you for a free consultation. We will discuss your situation in a private and confidential meeting with one of our attorneys and see what options are available to you.