Even for people who have health insurance, the consequences of unexpected and sudden medical bills due to an illness or serious injury can be financially devastating. Of all bankruptcy cases filed, 62 percent are due to medical bills that are difficult to pay.
Medical debt can have a serious and negative financial impact, leading to increased financial instability and emotional distress. People who have substantial medical bills may find themselves struggling to pay their rent, utilities, mortgage and food bills. Sadly, some people find themselves in situations in which they begin missing mortgage or rent payments, forgoing heat or food in an effort to stay on top of the payments.
Some people find themselves in situations where they cancel needed doctors' appointments, avoid filling needed prescriptions or forgo necessary follow-up care. These types of collateral debt consequences can potentially jeopardize a patient's health. In addition, people who are unable to keep up with extensive medical debt face the problems associated with damaged credit ratings. Medical debts are often turned over to collection agencies, which in turn report to credit reporting agencies and engage in collection practicesl. People may also end up being sued and having their wages garnished or their bank accounts levied because of medical debt.
For some people, choosing to file bankruptcy may be a good option when they are dealing with medical debt. Bankruptcy may stop creditor harassment and provide the filer with relief from the debt. Bankruptcy may stop all collection activities and can prevent the filing of civil lawsuits in order to collect the debt. People who are overwhelmed by medical debt may wish to discuss their situation with a bankruptcy attorney.
Source: The Henry J. Kaiser Family Foundation, "Medical Debt among People with Health Insurance", Karen Pollitz, Cynthia Cox, Kevin Lucia and Katie , November 23, 2014