Bankruptcy and Medical Bills Go Hand in Hand

11-Aug-2010 According to a recent study published in the American Journal of Medicine, a staggering 61.2 percent of bankruptcies are medically related. While few people are filing medical bankruptcy based on medical bills alone, there are certain contributing factors:

• Over-Mortgaging: Many homeowners take out second mortgages or home equity loans to pay for mounting medical bills.
• Lost Income: Many people with chronic illnesses miss so much work that they lose either income from their job or both their job and insurance.
• Gaps in Coverage: Even people with health insurance are subject to gaps in coverage or huge coinsurance payments.

It is also interesting to note that over 75% of those filing medical bankruptcy have insurance, according to the above study. Many people mistakenly believe that they will never need to be concerned about bankruptcy and medical bills because they are covered by insurance, but that is not usually the case. Even individuals with insurance coverage are subject to copays, coinsurance and deductibles.

Any of the above factors, or more likely a combination of more than one lead to filing medical bankruptcy. Especially when you consider that many individuals have more than $5,000 in medical debt and don’t know what their other options may be. In this economy, hospitals and other medical practices are becoming increasingly aggressive about collecting debt. Many people facing bankruptcy and medical bills are considering bankruptcy just to stop the harassment.

Filing medical bankruptcy is certainly one way to deal with mounting medical bills, but there are other options to consider first:

• Ask for Help: Many individuals facing bankruptcy and medical bills are so overwhelmed that they don’t know to ask for help. Many hospitals and medical practices offer financial assistance based on income, discounts for paying with cash or special rates for uninsured patients. But you won’t know if these are available unless you ask.

• Come Up With a Payment Plan: Similar to other creditors in this economy, health care providers would rather be paid something rather than nothing. If you are willing and able to make payments on a regular basis, they may allow you a longer payment period.

• Contact a Professional: There are attorneys whose expertise is in bankruptcy and medical bills. They can advise you whether filing medical bankruptcy is your best choice, and if so can guide you through the process.

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