The United States currently ranks highest in health care spending among the developed nations of the world, according to the OECD. In fact, bankruptcy attorney Xue Connelly says the number one reason people file for bankruptcy in the U.S. is medical debt.

How can medical debt lead to bankruptcy?

“Medical cost in this country is high — regardless of whether or not you have insurance,” explains Connelly. Going to the hospital alone is extremely costly and most people don’t have the savings to overcome several thousands of dollars in unexpected hospital bills. Even more so, if the cause of the hospital visit results in:

  • Being diagnosed with an illness that requires continuous care
  • Being unable to work due to an accident, illness, or injury
  • Losing a job due to an accident, illness, or injury

When faced with crippling medical bills, Connelly says what typically ends up happening is one of two things. People either ignore the bill, which results in creditors calling. Or, they try to pay the bill at the expense of paying for other critical expenses — like their mortgage, car insurance or any number of other payments — that otherwise would have been covered if it were not for the accident, injury or disease.

“When these situations arise, expenses pile up, and they pile up pretty quickly. It becomes very overwhelming,” says Connelly. “Maybe you missed a credit card payment because you paid your doctor instead. Or you get in a car accident and have to take out a new car loan, in addition to credit card and medical bills that you can no longer afford as a result. Or you lose your job or can no longer work due to the disease or accident that you just had to deal with.” 

These factors can incite a domino effect of stressors. “You’re concerned about your finances, where your next paycheck is going to come from, or how you will pay your bills. You may have creditors calling your cell phone, potentially calling your work, sending you letters and you could start getting lawsuits as well. What was once just a health issue, has turned into a real financial stressor.”

How can bankruptcy be a responsible solution for medical debt?

“We’re always taught you have to pay your bills and you have to be on time — these are the things you do to be responsible, says Xue. “But sometimes, things don’t work out like you planned. Bankruptcy is a way to be responsible and get some relief. It is something our government and our court systems have put in place for these exact situations. Bankruptcy is a way for you to get back on track, for you to work again, pay your bills and move past this event, instead of letting it derail your life for years to come.”