Thomas F. Miles, Attorney and Counselor at Law
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Understanding medical debt and personal bankruptcy

Many California residents are aware of the impact that a serious illness or injury can have on an individual or a family's financial standing, up to and including prompting many to file for bankruptcy. But few understand just how this information has been gathered, and where the statistics supporting this claim come from. The following information is offered in the hopes of shining a light on the impact that medical bills have on personal bankruptcy.

A recent examination into the matter focused on information gleaned from bankruptcy schedules. These are the documents in which debtors list the full range of debts from which they are seeking bankruptcy relief. Medical expenses show up here in the form of medical bills and also through credit card debt that was used to pay for medical charges. It is important to understand that the medical debt that is discovered on a bankruptcy schedule is often not the full scope of the cost, as many people will have paid many of the bills before determining that bankruptcy was the best course of action.

Next, surveys are used to gather data concerning bankruptcy and medical costs. One such survey asked nearly 450 individuals why they had chosen to seek bankruptcy protection. Reasons were given as possible choices, including job loss, medical issues and other potential factors. Among those surveyed, 26 percent stated that medical bills played a significant role in their decision to file. These numbers are supported by a range of similar surveys.

When considering how best to approach a high level of medical debt, California consumers should understand that they have a range of options. Personal bankruptcy is one solution and can lead to the elimination of many forms of unsecured debt, including medical debt. While bankruptcy should never be taken lightly, there are many cases in which it is the clear path back to financial stability.

Source:, "Why medical debt and bankruptcy are growing problems", Daniel A. Austin, Jan. 28, 2015

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Thomas F. Miles, Attorney and Counselor at Law
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