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Bankruptcy and Medical Debt

Job loss and credit card spending are most often cited as the culprits of personal bankruptcies. Many people are therefore surprised to learn that the most common cause of bankruptcy among Americans is actually medical debt. According to a recent report by the American Journal of Medicine, more than 60 percent of bankruptcy filings are directly related to health care costs. These unforeseen, expensive and often long-term costs can push many people's finances over the edge.

Even individuals covered by medical insurance are not immune to the financial strain brought on by illness or injury. Taking time off of work can lead to debilitating loss of income, as can out-of-pocket costs brought on by high co-payments, deductibles, exclusions from coverage and other loopholes. If you are struggling under the weight of doctor bills, hospital charges, or any other type of medical-related debt, you may want to consider filing for bankruptcy. Your medical bills may be eliminated entirely or significantly reduced, depending on the type of bankruptcy you choose to file.

Filing for Chapter 7 bankruptcy wipes out all unsecured debt, which includes medical debt. It is important to note, however, that once an individual has filed for bankruptcy, he or she cannot do so again for another six years. Should you get sick during that six-year period, you may be more vulnerable to any future unpaid medical debt.

Chapter 13 is your other option in filing for bankruptcy due to medical expenses. A chapter 13 bankruptcy consolidates all of your debts into a repayment plan, which will allow you to repay your medical bills over a 3 to 5 year period of time. This process allows you to keep most of your property while repaying your debts. Chapter 13 is a viable option for those individuals with a stable disposable income and will allow you the extra time and flexibility needed to overcome the financial burden of your injury or illness.

Medical bills are a growing problem for many households, as the high cost of health care remains the most stressful financial burden for people in the United States. Fortunately, bankruptcy may offer a way out for individuals struggling with these very issues. If you are considering bankruptcy as an option to eliminate or reduce your medical bills, contact a local bankruptcy lawyer for more information.