Medical bills are one of the top reasons why Americans file for bankruptcy. In fact, a recent report indicated that 643,000 Americans file for medical bankruptcy each year. The good news is that medical bills are considered unsecured debt, and therefore a successful bankruptcy filing will discharge all of your unpaid medical bills. The bad news is that bankruptcy can have a significant impact on your credit rating. That doesn’t mean that it’s not the right answer, but it does mean that you should investigate your other options to determine whether bankruptcy is your best choice.

Options for Medical Debt

Most medical facilities are willing to negotiate with you to either lower your overall bill or to provide you with an extended payment period to help you settle your bill. Though there may be an application process involved in pursuing this, it will not be any more arduous than a bankruptcy filing would be, and has the benefit of preserving your credit rating and reducing your anxiety over unpaid bills. Start by contacting the billing office and asking who you can speak to about assistance. If you’re dealing with an individual physician it may be more of a challenge than a hospital, which generally is able to waive or discount uninsured medical costs.

Filing for Medical Bankruptcy

If your debts go beyond what you owe for your medical bills and you’re also behind on payments to credit card companies, your mortgage or other loans, then bankruptcy may be the right choice for you. Filing for a Chapter 7 bankruptcy will effectively eliminate your medical bills and other unsecured debts, though you will still be responsible for secured debts, and may be required to sacrifice some of your assets. There are certain debts that you will not be able to discharge, including child support. Importantly, you must pass a means test to qualify for a Chapter 7 bankruptcy.

Many people who owe more than they are able to pay choose to pursue a Chapter 13 bankruptcy, which is essentially a restructuring of your debts based on what you can afford to pay and how long you need to pay it.

To determine what your best answer is in the face of a mountain of medical bills, set up a consultation with our bankruptcy professionals today.