“It’s just life,” a sociologist and co-author of a recent bankruptcy study. “It’s not like they’ve done anything wrong.”
According to that study, almost 60% of people who had filed for bankruptcy cited medical bills as “very much” or “somewhat” of a contributor to their bankruptcy. The respondents could choose multiple factors as contributors, but medical bills were cited more often than student loans or home foreclosures.
Consumer advocates worry that the problem is only going to get worse under current policies. That’s because the uninsured rate, always robust, has been rising. Some health plans only cover catastrophic illnesses. Many, if not most health coverage has a high deductible, meaning that patients are on their own until the deductible is met. And, provider networks are getting narrower, meaning that more people are getting care from out-of-network providers, where insurance pays less.
As you can see, it’s not just people without health insurance who are at risk. Many people with good insurance are dealing with high out-of-pocket expenses and out-of-network costs. Some don’t realize that their insurance won’t cover things like pregnancy, for example.
When doctors and hospitals can charge thousands or tens of thousands of dollars even though you have decent insurance, most people are just one emergency away from going under.
Bankruptcy can be a positive way to move forward
If you’ve been hit with a whopping medical bill, you may be at a loss for what to do. You can try to negotiate with the provider, but you may not get far.
Although most people consider bankruptcy a last resort, it’s comforting to know that it is available. You typically won’t lose your car or any personal property in bankruptcy — most people lose only their debts.
The vast majority of medical bills are eligible for either Chapter 7 or Chapter 13 consumer bankruptcy. The main difference between the two chapters is that, under Chapter 7, your qualifying debts are wiped out entirely, although you must meet certain criteria to be eligible for Chapter 7.
Under Chapter 13, you will work with your attorney and the bankruptcy court to develop a three- to five-year repayment plan at a rate you can afford. Once you’ve completed the plan successfully, other qualifying debt may be discharged.
Don’t let medical debt keep you from getting the care you need. Discuss your situation with an experienced bankruptcy attorney.