Many of our clients come to us burdened with unimaginable medical debt. Many of those clients had medical insurance coverage which covered a small portion of the debt and left the client with very large co-pays. In some cases, the client has great credit but is so overwhelmed with medical debt that filing a bankruptcy is the only hope.
Bankruptcies resulting from unpaid medical bills are one of the most common reasons for filing bankruptcy. One study found, medical bankruptcy accounted for the majority of personal bankruptcies. According to the study one in five American adults will struggle to pay medical bills this year. A sudden accident or frightening diagnosis can touch virtually anyone, unleashing mountains of bills even on the insured. In fact, medical bills are the leading cause of personal bankruptcy, a last resort after millions of families have drained their savings, maxed their credit cards and even refinanced their homes.
Medical bankruptcy doesn’t only happen to those without health insurance. In fact, many of my clients filing for medical bankruptcy are covered with health insurance but have been left with tremendous co-pays that they can’t tackle.
Medical debt from medical insurance co-pays and/or uncovered medical expenses can be including in a bankruptcy. Medical debt can be discharged (wiped out) in either a chapter 7 bankruptcy or chapter 13 bankruptcy. When medical debt is discharged in a bankruptcy, the creditor or collection agency can never attempt to legally collect the debt.