Given the skyrocketing cost of medical services and the likelihood that your health insurance will not cover the full cost of a surgical procedure or extended hospital stay, we frequently get calls from clients who want to know if they can file bankruptcy on medical bills.
The answer to this question is “yes,” you can include medical debts in your Chapter 7 or Chapter 13 bankruptcy. Medical debt is almost always unsecured, meaning that your obligation to pay a doctor or hospital is in the nature of a signature loan. There is no linkage to real or personal property.
Will I be Able to get Medical Care in the Future from a Health Care Provider that I Include in my Bankruptcy?
Unfortunately there is no absolute answer to this question. My firm’s experience has been that hospitals generally do not hold a prior bankruptcy filing against you. Remember two important facts – first, under state and federal law, a hospital may not turn away an emergency patient, regardless of ability to pay or outstanding debt. Second, once a hospital bill is discharged in a Chapter 7 or Chapter 13, the provider may no longer attempt to collect it. Refusing to admit a patient because of a discharged old debt could be seen as an illegal attempt to collect that debt.
Private physicians may or may not refuse to treat you in the future if you discharge an outstanding balance. The factors that seem to matter most to private doctors include the amount of discharged debt, whether insurance paid at least part of the debt and whether you have insurance going forward.
You might also be able to work out a voluntary payment plan whereby you agree to pay your doctor or dentist some or all of what you had discharged in your bankruptcy. If you are treating with a physician and you want to continue with treatment, we recommend that you contact that provider prior to filing to clarify what will happen if you file.
Can my Doctor Object to my Bankruptcy?
In theory, a medical provider can object to discharge under Section 523(a)(2) under the grounds that a patient incurred services fraudulently, planning to file bankruptcy as soon as medical care was over. For example, imagine a situation whereby you undergo a cosmetic or non-emergency dental or plastic surgery procedure on Tuesday, and file bankruptcy on Friday and include the medical debt.
In our practice, we have never seen this type of objection, although it is theoretically possible. Here, too, our recommendation is that you communicate your intentions to your doctor and try to work out some sort of arrangement, or be prepared to lose your patient-physician relationship.
Are Medical Bankruptcies Common?
CNN reports that over 60% of bankruptcy filings in the United States arise from unmanageable medical debt. In some cases, the unpaid balances are the primary cause of a filing and in other cases, a contributing cause. This relationship between medical debt and bankruptcy is especially strong in bankruptcy filings by middle class debtors.
Remember, however, that if you decide to file for bankruptcy, you have to include all of your debt – you cannot file only against your outstanding medical bills. Medical debt collectors can be extremely aggressive and relentless. If you are dealing with mounting medical debt that is about to drive you over your own personal financial cliff, please call our office at 770-393-4985 for confidential, straight-forward advice about your bankruptcy and non-bankruptcy options.
Learn More About Filing a “Medical Bankruptcy”
Ginsberg Law Offices offers a free, low-stress consultation with attorney Susan Blum or Jonathan Ginsberg where you can ask questions about the bankruptcy process and how it may work for you. We also discuss non-bankruptcy options. Call us at 770-393-4985 or fill out our quick 2 page mini-questionnaire and fax or email to us.