A little more than two-thirds of Americans who file for bankruptcy do so for the same reason: mounting medical bills. In fact, medical debt represents the top reason people pursue bankruptcy.
A sudden illness, emergency surgery, and injuries sustained in a car or workplace accident can put anyone into a financial tailspin from which is difficult to recover.
Other reasons: foreclosure, excessive spending
The American Journal of Public Health conducted a bankruptcy-related study in 2019. Its findings revealed that roughly 530,000 families in the U.S. file for bankruptcy each year related to medical bills. The publication based its findings on research involving 910 U.S. residents who sought bankruptcy between 2013 and 2016.
The study found that other main reasons for filing for bankruptcy included:
- Foreclosure or inability to afford mortgage payments: 45%
- Excessive spending: 44.4%
- Providing financial help to relatives or friends: 28.4%
- Student loans: 25.4%
- Divorce or separation: 24.4%
Filing for bankruptcy will eliminate most of your medical debt. But before you pursue this route, there are a couple of important steps to consider taking.
Review bills and negotiate
The first one is to review your medical bills. Insurance companies and hospitals are imperfect as each may have made mistakes that unnecessarily caused this financial burden. Perhaps the hospital billed you more than once for the same procedure or for treatment that never happened. Also, inquire with the insurance company as to why it did not cover a certain medical procedure.
Another option is to negotiate with the hospital. Its billing department may simply accept a partial payment.
Getting on with your life and surviving
Bankruptcy allows you to wipe the slate clean and get on with your life without having to worry about debt, especially medical debt. You are not the only person to go through the simultaneous challenges of medical and financial hardships. But you will survive.