Medical Bills and Bankruptcy

When I speak with a potential new client, and I am trying to get a feel for their situation, one of the first questions I ask is, "how much credit card and medical debt do you have?" There is a good reason I ask this question, because these are the primary types of debt that weigh most of my clients down. Medical bills are only growing larger.

Medical bills can be downright astronomical, especially for individuals without health insurance. Many clients face five-figure medical burdens. I have had multiple clients with over $100,000 in medical debts. These is not much you can do about debts this large, unless your income is enormous. Bankruptcy must be a strong consideration in these cases. Medical bills do not spiral as quickly as credit cards, because there is normally no interest owed. However, the underlying debts are often far larger.

Not all medical debt burdens are this dramatic, but medical debt in the thousands or ten-of-thousands can be just as onerous when combined with credit card debt, mortgages, car payments, and student loans. The good news is that medical is almost always dischargeable in bankruptcy, whether it is made up of several small co-pays, or a huge six-figure bill. Eliminating them can be the main purpose of your bankruptcy.

Unfortunately, this is a problem that will only get worse, as Congress seems intent on limiting who can receive affordable health care, and how much it will cover. Uninsured debtors are always a sever injury or extended illness away from financial ruin. Bankruptcy will be the best, and most legitimate option for dealing with the huge bills that result. This is a problem worth watching in the coming years. I expect more and more people being forced to file over the next 3 or 4 years.

When I meet with individuals facing medical bills, I always make sure they gather up every bill they have in their possession. Medical debts are often not reported to credit agencies, and therefore do not show up on credit reports. Debts not disclosed are not discharged though bankruptcy, so it will be important to provide your attorney with every statement. Trying to decipher medical bills can be headache-inducing, as statements on the same service often show up in different forms, with different return addresses and account numbers. More is better... gather everything up and let your attorney review it. There is no need in missing a bill due to lack of thoroughness.

A final thing to consider with medical bills is whether you will have any upcoming or ongoing bills. If you file bankruptcy too early, these bills will not be discharged, as only debts accrued before bankruptcy can be discharged. Let your attorney know about your medical future so he or she can help you best determine when to file your case.

Medical bills will become a growing debt problem as Congress reduces and limits access to many working Americans. I have seen this in the past, and it is sure to reoccur as the number of uninsured Americans increases. Contact us if you are facing medical bills you can't pay to set up a free consultation and learn about your options.