Americans know all about debt. In fact, a fair portion of the country’s political discourse revolves around it fairly continuously due to the national preference for credit. That preference is not necessarily a bad thing, and in a healthy economy, debt can even drive growth for a time. When wages stagnate and costs do not, though, debt creates problems because it becomes necessary for short-term functioning, even as it undermines your long-term resources. Health care debt is no exception; in fact, it might actually exemplify this because most people have very little control over the extent of the medical services they will need to remain healthy, so when costs add up, it is easy to wind up in a situation where your medical debt outstrips your income.

Details about medical debt and bankruptcy

In 2013, just before the Affordable Care Act rolled out marketplaces for the first time, CNBC ran a story about a study conducted by Nerdwallet. That study analyzed information from the Centers for Disease Control, the U.S. Census, the Commonwealth Fund and the federal court system, and it concluded that medical debt was the number one cause of bankruptcy. In addition to that, the study found the following:

  • 56 million adults, or about 20 percent of those between 19 and 64, struggle with medical debt each year.
  • High deductible plans with a large out-of-pocket cost burden are a major driver of debt.
  • About 10 million fully insured people will incur medical debts that impose hardship each year.

While information about the relationship between medical debt, bankruptcy and health care coverage after the marketplaces is still forthcoming, the fact that fully insured people were incurring debt at a high rate even before it was instituted seems to point to an ongoing problem, especially since the long-term nature of debt makes one year’s medical expenses into a multi-year repayment struggle for many people.

What to do if you are facing bankruptcy

If your medical debts are adding up and you think you need to file for bankruptcy to help deal with them, you need to talk to an attorney about which of your debts will be discharged during bankruptcy and which will not. It is also important to understand how different forms of bankruptcy will affect your assets and property. Not all bankruptcies are the same, and your individual situation and needs going forward play a major role in deciding which form is right for you. A skilled attorney can help make that decision easier.