Bankruptcy is often sparked by medical expenses

Posted by Lauren S. CohenJan 20, 20200 Comments

In New York and across the United States, one of the most common ways for people to find themselves in difficult financial circumstances is through medical expenses. For most people, these medical costs will lead to various attempts to keep from falling too far behind. One note to remember is that if the costs are too substantial to handle, an alternative to consider is bankruptcy.

Understanding the problem and potential strategies to avoid it might be useful. Consumer Bankruptcy Project conducted a study in 2019. It surveyed 910 people who moved forward with a bankruptcy from 2013 to 2016. Of that group, 65.5 percent had medical problems as a contributing factor. Up to 530,000 families might need to file for bankruptcy in part due to medical expenses.

The Affordable Care Act was supposed to reduce this problem, but the statistics have remained largely the same. Younger people are less prone to bankruptcies because of medical debt than elderly people as 4 percent of the non-elderly bankruptcy filings came about because of medical costs and lost income. Still, a 2019 study showed that more than 137 million Americans stated they faced financial woes because of medical expenses in the previous year.

A 2015 survey indicated that two-thirds of those who were unable to pay a medical bill accrued the debt from being admitted to the hospital for treatment after an accident. One-third said the bills rose over time due to illnesses or conditions. People are advised to save money, negotiate a reduction, keep a close eye on out-of-network costs, and to shun credit cards to pay medical expenses. These tactics, while sensible, may not succeed. Bankruptcy can help to clear that debt. Discussing the case with a law firm experienced in bankruptcy might help with a case.