You have likely heard the common statistic that half of all bankruptcies are caused by medical bills. Given the high costs of healthcare, it is easy to believe that medical bills are a top cause of bankruptcy. A new study, however, suggests that just a small fraction of bankruptcies are actually caused by medical debt. Our Beavercreek, Ohio bankruptcy attorneys discuss medical bankruptcies, their frequency, and your options if you have medical debt below.
Reexamining Medical Bankruptcies
A new study released by the New England Journal of Medicine refutes previously held notions that medical bills are a primary cause of bankruptcy. Rather than looking at how many bankruptcies included medical bills, which can be complex due to the multi-causality of bankruptcies, researchers started with the illness. They asked people who had been ill how much more likely they were to declare bankruptcy after being sick. The result: only four percent.
Critics of the study caution that the study ignored a host of people with chronic illnesses because it included only those who were sick after three years of health. While this one study is not the end all to be all in medical bankruptcy research, it does suggest that perhaps medical bills are just one of many driving factors in a bankruptcy, and medical debt alone is not often the sole cause of bankruptcy.
Erasing Medical Bills in Bankruptcy
Even if medical debt is not as overwhelming as it once seemed to Americans as a whole, for those struggling to repay medical bills on top of other debt, bankruptcy may be the only answer. Medical bills are considered unsecured debt, which means you can eliminate your medical bills through a Chapter 7 bankruptcy. Credit card debt is also unsecured, so any medical bills you paid via your credit card can similarly be erased.
You will first need to qualify for Chapter 7 bankruptcy, which requires that your disposable income be low enough to pass the so-called means test. Those that do not pass the means-test could consider restructuring their medical and other debt through a Chapter 13 bankruptcy. Accordingly, anyone struggling with medical debt and other burdensome debt should consult with a bankruptcy lawyer as soon as possible. Contact us today.