Many people associate filing bankruptcy with irresponsible spending. Yet, when researchers looked into why people file for bankruptcy, they found a far more shocking truth. According to a study published in the American Journal of Public Health, two-thirds of Americans who file for bankruptcy do so because they cannot pay their medical bills.
It is well publicized that many people cannot afford health insurance. What is less well known is that even those who do have health insurance may face massive medical bills that they cannot afford to pay due to their insurance’s limited coverage. So health insurance or not, you could still end up considering bankruptcy because of medical debt.
What happens if you do not pay your medical bills?
Health care providers may pass medical debts onto a third party. You could have debt collectors harassing you. They might even ask a court to deduct payments from your wages.
Bankruptcy could help you clear medical debt
You might be worried about how bankruptcy will affect your credit score. Yet, if you cannot pay your bills, you will already be damaging your credit rating. If facing unpayable medical debts, you might consider Chapter 7 or Chapter 13 bankruptcy. There are several differences between the two, and you may not be eligible for both.
You can only file for Chapter 13 if the total amount of your unsecured debt is below a specific limit, currently set at around $400,000. Medical bills could easily exceed this. While Chapter 7 does not limit the unsecured debt you can clear it does limit how much you can earn to qualify.
Deciding how best to deal with your debts can be challenging. An attorney can look at your situation and advise you on what options are available.