Many people assume that most of bankruptcy cases are filed by overspenders who wound up with way too much credit card debt. The truth is, however, research shows most people who file bankruptcy do so because of medical debts. Between 2003 and 2004, a little over half of personal bankruptcies came about because of medical debt, and 75% of those cases were for people who had health insurance.
- Medical bankruptcy is not a legal term. In fact there is no legal distinction between bankruptcy and medical bankruptcy. The term is used to describe situations in which people file for bankruptcy mainly or solely due to their medical bills.
- Public hospitals and healthcare providers may be able to help. Depending on your income, you may qualify for low-cost healthcare through your state, local government, or charitable organizations. Seek treatment at a public hospital and ask for assistance with the costs. You may be surprised to find out you can qualify for low-cost healthcare, even if you aren’t eligible for Medicare or Medicaid.
- Don’t put the charges on your credit card bill. Once you’ve paid your medical bills off by charging the expense to your credit card, you won’t have the option of negotiating with your healthcare providers on the terms of repayment. Instead, you’ll be paying charges for high interest and it could hurt your credit score.
- Bankruptcy may not be the best option. Research shows that over 60% of medical bankruptcies were filed on less than $5000 worth of debt. Filing for bankruptcy can be expensive in the short term, and it can harm your credit record for years into the future. Contact a bankruptcy attorney to help you understand the benefits and costs of filing bankruptcy in your situation.
- Debt settlement may be an option. If you are willing to pay your debts, but need a longer time period so you can keep up with the payments, contact your medical billing office and tell them about your situation. They may be willing to settle your bill for less than the face value, or give you more time to pay it off.
If you are unable to pay your debts, bankruptcy could be a good decision. Always review your choices carefully, and discuss the situation with a bankruptcy attorney who can best advise you about the law, your choices, and the financial repercussions.