Bankruptcy NewsMedical Bankruptcy: Breaking the Myth of 1/2 of all Filings

March 27, 2018

Medical Bankruptcy: Breaking the Myth of 1/2 of all Filings


Years ago, there was all the talk about how “half” of all bankruptcies were due to medical bankruptcy. That is, the only reason people were filing bankruptcy was due to their health care expenses and medical bills. This was the healthcare bankruptcy myth.

That never quite made sense to this Santa Clarita bankruptcy attorney. I never did an actual study and categorized client debt, but that always seemed quite high. If one thing was present in half our cases, it was job loss. Divorce. Or back in 2009, rising adjustable mortgage payments.

What are Medical Bankruptcies?

Part of the confusion is the looseness of the language. Is a healthcare bankruptcy one where there’s at least one medical debt? A large one? It’s hard to show causation just from looking at a bankruptcy petition.

Today, we see a report that some researchers actually did an “event study.” It turns out medical bankruptcies were never all that common. The fraction of bankruptcy cases caused by medical events is 4%.

And that’s a number that feels a bit more accurate.

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Antico Debt Law – A bankruptcy attorney in Santa Clarita CA and federal debt relief agency pursuant to Title 11 of the Bankruptcy Code

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