It is estimated that one in five families are burdened with excessive medical bills. Sadly, many will have no choice but to file a medical bankruptcy.
When most people think of people that file for bankruptcy, they picture people who are living lavishly beyond their means getting in over their heads and then walking away from their debts. The reality is that in 2009 it was estimated that over 60% of all bankruptcy filings were due to medical issues. It seems to be a growing trend. The number of bankruptcies that were caused by medical bills increased from 46% in 2001 to 62% in 2007. What is surprising is that according to the American Journal of Medicine, most people who file a medical bankruptcy are well educated home owners with health insurance.
Despite insurance, these individuals find themselves with excessive medical obligations. Often, they do not owe an excessive amount, but thanks to the aggressive collection practices that are common in the medical industry they end up filing for bankruptcy anyway. When you are dealing with debt collections that are not medical, the chances of you actually being sued are slim. However, most doctors and hospitals are quick to turn accounts over to collection agencies that are very quick to file suit. A vast majority of the lawsuits are handled in small claims courts. Because they cannot afford to get legal advice, these people end up with wage garnishments that limit their abilities to handle other bills.
The truth is that without significant cash reserves, most people could find themselves in this situation. This is especially true as illness not only increases expenses, but often results in an interruption of income. According to researchers at the American Journal of Medicine “Middle class families frequently collapse under the strain of the health care system that treats physical wounds, but inflicts fiscal ones.”