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Using a Bankruptcy Filing to Manage Medical Bills


A recent survey by CNBC found that, over the last decade, more people cited unanticipated medical bills than any other cause as the event that triggered a personal bankruptcy filing. It’s estimated that a million or more people file for bankruptcy protection in any given year to try to get medical obligations under control. But it that the right strategy for everyone? Not necessarily.

If your credit record is strong, but you’ve been hit with a big medical expense, you need to know that you’ll probably take a substantial hit on your credit rating. If you don’t need credit any time in the next 5-7 years, that’s not a problem. In addition, even if you do, most creditors will look not only at your scores, but at whether you’ve honored your recent obligations. Creditors understand that everyone can be subject to unexpected financial challenges—they are more interested in your long-term history than a single event.

There are other options, besides bankruptcy, that may be preferable:

  • Ask the medical provider if a negotiated payoff can be arranged—Most hospitals, doctors, urgent care facilities and other medical providers don’t want to have to participate in a bankruptcy proceeding, and are often willing to accept less than full value to keep you from filing. Many will even let you make installment payments on a negotiated settlement.
  • Look into the various medical assistance programs—The Affordable Care Act requires that non-profit hospital offer discounts or free care to low-income patients, as a condition of their non-profit status. There’s also the Hospital Care Assistance Program, which provide income-based benefits.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we handle all types of insurance coverage disputes. Contact our office online or call us at 856-424-6400. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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