What You Need to Know About Medical Bankruptcies

May 21, 2024 | 6 min read Financial Assistance

For families or individuals who lack dental or health insurance, a simple trip to the doctor or emergency room can cost thousands of dollars. And for those living paycheck to paycheck, costs like these can be an unthinkable setback. Even those with insurance can find themselves with bills for procedures that weren’t covered.

From negotiating lower payments to using crowdfunding, this article offers seven tips on how to avoid medical debt bankruptcy and how to manage medical debt if you already have it.

Medical debt statistics to know

Can you file bankruptcy on medical bills? Over 66.5% of all bankruptcies are tied to medical issues, according to a CNBC study. While the Affordable Care Act has helped 20 million people gain insurance coverage, the number of uninsured Americans is creeping back up and subsequently more medical bankruptcies in the US. According to KFF, 45% of uninsured adults based in the United States said they can’t afford the cost of health care coverage and expensive medical treatments.

These high medical care costs can lead people to cut corners in their healthcare management, which leads to medical bankruptcies. On top of how many people file bankruptcy, The Burden of Medical Debt report from the Kaiser Family Foundation and The New York Times found the following:

65% of participants postponed going to the dentist.
62% used over the counter medicine in lieu of seeing a doctor when sick.
43% did not fill a needed prescription.
43% did not get medical treatment recommended by a doctor.
41% claimed that an individual in the household needed to take on more work to compensate.

How to avoid bankruptcy due to medical bills and find relief from medical debt

While data about medical bankruptcies can be discouraging, it’s important to remember that there are ways to find financial relief. When you don’t know how to clear medical debt, keep these seven tips in mind.

1. Don’t ignore the bills

Do medical bills affect your credit score? Just like regular bills, your credit score can plummet if you toss medical bills in a drawer and put off paying them. It’s important to notify hospitals, health providers, and insurers right away if you think a payment will be late, or if you want to request a payment plan.

Paying a portion of your bill, even a small amount, is still better than making no payment at all—it keeps you on better terms with the recipient. If you don’t have the funds available to make a payment on time, ask about financial bankruptcy and medical bill relief programs that may be available to you.

2. Double check your medical bills

Always ask for an itemized statement so you can look for billing errors. These are more common than you might think, and they could end up costing you thousands of dollars if left unchecked. If you have questions about your bills, don’t be afraid to contact your medical provider and ask for clarification before paying. Make sure that all payments from both you and your insurance company have been applied to your bill.

3. Negotiate a lower rate

This may seem like a daunting task, but it’s certainly worth trying. Call the billing office and ask if they’d accept a lower rate for your care. They may not return your calls right away, and you may hear “no” a few times, but being persistent can pay off. You can also sometimes get lower rates for paying cash or paying in a way they favor.

4. Put away your credit cards

Some may argue that swiping plastic is the leading cause of bankruptcies. Whether or not that’s true across the board, it’s best to avoid using credit cards to pay for your medical expenses, as it only adds compound interest to injury. It’s against the law for hospitals to deny you medical treatment, so don’t rush to use a credit card if that’s the only form of payment you have at the moment. You can work out a payment plan with the hospital later.

5. Apply for financial assistance

Many hospitals offer emergency financial assistance programs for those who are struggling to pay off overwhelming medical bills. If you’re unemployed, uninsured, or simply need extra financial help, then looking into assistance from your hospital may be a good place to start. Most financial assistance programs require you to fill out a comprehensive application and provide proof of your financial situation. You can also learn more about how to file medical bankruptcies to find out if you are eligible.

6. Consider taking out a bank loan

Applying for a bank loan has often been the go-to solution for people in need of money they don’t have. While this solution is a reliable way to receive money, keep in mind that applying and qualifying for a loan as an individual or business can take time. It also means paying an interest rate on top of the total loan amount.

7. Use fundraising to get rid of medical debt

Crowdfunding is a proven way to raise funds quickly from family, friends, and even strangers who want to show their support. Creating a medical fundraiser gives you an outlet to tell your story and can keep you from falling into the bankruptcy medical bills can cause. While it’s always hard to ask for help, you might be surprised by the number of friends and family members who want to help you figure out how to get rid of debt.

Millions have turned to GoFundMe when they weren’t sure how to get rid of medical debt. If you need pointers along the way, our blog is here to help. These are just a few of our posts related to medical costs and fundraising to avoid medical bankruptcies:

Find relief from medical debt today

Crowdfunding through GoFundMe means you don’t have to face your medical debt alone. Others can join you on your health journey and help you avoid filing bankruptcy for medical bills and get back on your feet. If you need some tips to get started, read our medical crowdfunding guide or our blog post on how to pay medical bills. When you’re ready, sign up to create your fundraiser and find medical debt relief today.

Start a medical fundraiser