January 23, 2021

Medical Bills and Bankruptcy

According to a Harvard study recently reported in the LA Times, medical bills played a role in 62% of all bankruptcies filed in 2007, which is up 7% from 2001. Interestingly, a large majority (78%) of these filers even had health insurance.

When someone is burdened with medical problems, multiple other issues arise that contribute to why they would need to file for bankruptcy. Along with extremely high medical bills, lost wages from having to take days of work off all are also major factors.

The study also revealed a fact that challenges the negative stigma often associated with filing bankruptcy. Approximately 70% of the people that filed bankruptcy for medical reasons owned homes, and the majority had gone to college. It is finally becoming realized that there is no shame in filing bankruptcy, as so many filers these days are middle class and financially stable before medical reasons push them into bankruptcy.

Medical problems can occur suddenly and can hit hard. And they can happen to anyone. Health insurance is not a guarantee that injuries or illness won’t burden you with out-of-control debt, and it’s almost impossible to plan for the unexpected.

If you are filing medical-related bankruptcy, medical bills are considered unsecured debt and will be discharged entirely if you are filing Chapter 7 bankruptcy. If you are filing a Chapter 13 bankruptcy, your medical bills can be ordered and combined with other debts, and potentially reduced, in a bankruptcy trust. In either case, bankruptcy may be just what you need to eliminate your debt arising from medical bills and help you get back on your feet again.


Jonathan Ginsberg has been in private law practice since 1987. He writes and teaches about Chapter 7 and Chapter 13 bankruptcy protection.