Health Care Costs and Bankruptcy: Medical Debt Still Strains American Families

The cost of health care remains a major concern for nearly all Americans, and there is still no shortage of health care related news coverage. Since this post was originally published in 2017, the health care debate has changed. The Affordable Care Act a/k/a “Obamacare” remains in place, the Health Insurance Marketplace remains active, and many current questions focus on coverage, premiums, deductibles, out-of-pocket costs, and the future of premium tax credits. Regardless of what happens in Washington, D.C., medical bills and other health care costs continue to be a major expense for many Americans. At times, these costs can be overwhelming.

Health Care and Bankruptcy

According to recent KFF health care debt research, medical and dental bills continue to be a major source of financial strain for America’s families, although there is no single official measure that ranks medical debt as the #1 cause of bankruptcy. Now, this is not news to me as I frequently counsel with individuals and families who are facing substantial medical and other debt. But what caught my attention was the magnitude of the problem. KFF reports that four in ten U.S. adults have some type of debt due to medical or dental bills. A Peterson-KFF Health System Tracker analysis of government survey data estimates that 20 million adults owe significant medical debt, with total medical debt of at least $220 billion. Approximately 14 million adults owe more than $1,000, and about 3 million owe more than $10,000. Think about that for a moment. Medical debt is not just a problem for the uninsured or for families facing a single catastrophic bill. It can include bills owed directly to providers, balances placed on credit cards, loans from family or friends, and other debts people take on to pay for care. If a person owes $1,000.00 in medical debt and moves it to a high-interest credit card, the interest can make the debt harder to pay off over time. Where is that money going to come from? How do you break out of that cycle?

Turning Medical Debt Into More Debt

Recent research also shows how medical debt can turn into other forms of debt and financial sacrifice. KFF reports that adults with health care debt often cut back on basic household spending, use up savings, increase credit card debt, work more hours, skip or delay paying other bills, take money out of long-term savings, take out other loans, or change their housing situation. This means that medical debt can quickly become credit card debt, personal loan debt, or other household debt. Such tactics may provide short-term relief, but they rarely solve the underlying problem.

Medical debt is not limited to any one income group. KFF reports that health care debt is more common among uninsured adults, lower-income adults, Black and Hispanic adults, women, parents, and people living in the South. At the same time, many insured people also report current health care debt. These are often people who are facing large or unexpected out-of-pocket costs for health care, including deductibles, copayments, coinsurance, uncovered services, or bills they expected insurance to pay.

Finally, national bankruptcy filings are no longer near two million per year. According to the Administrative Office of the U.S. Courts, there were 574,314 total bankruptcy filings in the 12-month period ending December 31, 2025, including 549,577 non-business filings. Medical debt is frequently reported as a contributing factor in personal bankruptcies, but bankruptcy filings usually involve more than one cause. Medical bills, loss of income, credit card debt, housing costs, and other financial pressures can overlap.

So, if you are facing overwhelming medical bills that you cannot afford to pay, you are clearly not alone. Bankruptcy may be one option for dealing with medical debt and other unsecured debt, but it is not the right solution for everyone and the rules depend on your specific circumstances. A bankruptcy discharge can relieve a debtor from personal liability for certain debts, but there are exceptions, and you should speak with a competent bankruptcy lawyer before deciding what to do. As a consumer bankruptcy lawyer, I have helped many families over the years get the peace of mind (and stress relief) they deserve when faced with overwhelming debts they couldn’t possibly pay out of their household budget. And whether you consult with our firm or another competent and reputable consumer bankruptcy lawyer, you owe it to yourself and your family to get the help you need. You may be surprised just how good life can be without the crushing pressures of debt.

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Frequently Asked Questions About Medical Debt and Bankruptcy

How common is medical debt in the United States?

Medical debt remains a widespread financial problem. The article notes that KFF reports four in ten U.S. adults have some type of debt due to medical or dental bills, and that a Peterson-KFF Health System Tracker analysis estimates that 20 million adults owe significant medical debt.

Can medical debt contribute to bankruptcy?

Yes. Medical debt can be one of the financial pressures that contributes to a personal bankruptcy filing. However, the article explains that bankruptcy filings usually involve more than one cause, such as medical bills, loss of income, credit card debt, housing costs, and other household financial pressures.

Is medical debt officially the number one cause of bankruptcy?

There is no single official measure that ranks medical debt as the number one cause of bankruptcy. The article explains that medical and dental bills remain a major source of financial strain, but bankruptcy filings often involve overlapping causes rather than one isolated reason.

Can bankruptcy help with medical bills?

Bankruptcy may be one option for dealing with medical debt and other unsecured debt, but it is not the right solution for everyone. A bankruptcy discharge can relieve a debtor from personal liability for certain debts, but there are exceptions, and the rules depend on the person’s specific circumstances.

Can people with health insurance still have medical debt?

Yes. The article notes that many insured people still report health care debt. Out-of-pocket costs such as deductibles, copayments, coinsurance, uncovered services, or bills they expected insurance to pay can still create serious financial strain.

What happens when medical bills are paid with credit cards or other loans?

Medical debt can turn into other forms of household debt when people use credit cards, personal loans, family loans, or other financing to pay for care. These steps may provide short-term relief, but the article explains that they rarely solve the underlying financial problem.

What should I do if I cannot afford medical bills?

If medical bills and other debts have become overwhelming, it may help to speak with a competent bankruptcy lawyer about your options. Bankruptcy may be available in some situations, but whether it is appropriate depends on your specific debts, income, assets, and household circumstances.

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