Personal Bankruptcy Often the Only Medicine for Medical Debt

July 14, 2013 2:52 am Published by

Medical debt is still a leading cause of America’s bankruptcy filings, I realize as I work to provide Indiana bankruptcy help.  In fact, according to, “..medical bills now contribute to roughly 60 percent of America’s personal bankruptcy filings”.

Most people assume their health insurance will protect them, but with out-of-pocket expenses, co-pays, medications, and emergency treatment, people can still find themselves owing more money than they can pay.

It’s interesting that, in the five Zuckerberg bankruptcy law offices, it’s rare for us to see debtors filing personal bankruptcy in Indiana solely as a result of medical debt.  What we do see, as one of my Bloomington bankruptcy lawyer colleagues points out, is that medical problems and expenses contribute to the financial downslide of individuals and families in several ways:

  • Injury or illness causes people to take significant time off from work, and with the loss of income, they have trouble keeping up with their bills.
  • Expensive medical procedures drain savings and even retirement accounts, and then there is no money to cover other emergency needs.
  • Illness or injury affects people’s ability to find and keep future jobs, so they never seem to be able to climb out of debt.

Since I’m always on the alert for some hopeful news to share with Bankruptcy in Indiana readers, I did read that Congress is working on eliminating credit report errors that stem from medical billing mix-ups.  As Forbes reports, “There’s at least one thing Congressional Republicans and Democrats agree on, and it’s that medical debt is a problem.”  Legislation is in the works called the Medical Debt Responsibility Act of 2013, which would help Americans who have seen their credit scores drop due to medical bills.

So, can filing personal bankruptcy, either Chapter 7 or Chapter 13, help with medical bills? The good news is yes. First of all, under the automatic stay, all legal action by creditors against debtors is halted. Medical bills are unsecured debts, eligible for discharge in bankruptcy.  We often find that personal bankruptcy in Indiana is the only medicine strong enough to handle medical debt!


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This post was written by Mark Zuckerberg

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