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August 21, 2009
"Medical" Bankruptcy Cases
I try to stay away from soap boxing too much on this blog. That is part of the instructions from our leader Prof. Paul Caron.
But I keep reading here and there about how many bankruptcy cases, indeed often in terms of percentages of total bankruptcies, are filed by persons seeking to escape from medical expenses and/or filings caused by medical problems of the debtor[s]. It's not my experience.
I have filed about 20 chapter 7s this year, maybe 2 or 3 chapter 13s (too complicated), and about 10 chapters 11s. I have spoken to probably 10 times that number of potential debtors this year alone. None of them have any significant medical expenses or had financial problems caused by medical issues. Not a big enough sample you say? I have filed or overseen the filing of probably 2,000 consumer bankruptcy cases in the past 20 years and again I don't remember any "medical" cases although I am sure there were a few. That is still not much of a sample given the big picture but what I see is articles or politicos/blogs or what have you that say that 60% of all cases (or 30%) or some amount of hundreds of thousands of cases per year are caused by the medical problems of the debtors. I haven't seen it in my practice. I'm sure there are studies with lots of mathematical terms and figures which prove the percentage but my off-the-cuff guess would be that the total is 2%.
JH
"The flag is up." Jim Healy
August 21, 2009 in Current Affairs | Permalink
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Comments
Most of my Chapter 7 clients have some medical debts not covered by insurance, but those debts do not predominate in dollar amount. I've had a few with large medical debts and large other debts, but the medical debt was not the trigger for the bankruptcy filing. I have one client right now whose filing is truly caused by medical debt, but it doesn't look like it. For many years after his wife's death, he tried to pay all her medical bills on his credit cards. After more than a decade of that effort, he's filing bankruptcy on what has now become his credit card debt.
Editor's note: Great point. Thanks.
Posted by: Greg Jones | Aug 22, 2009 8:33:03 AM
My experience is that debtors love their doctor and often fail to file because that means they believe they will have find a new health care provider. That consideration overrides the urge to get rid of their debt.
Posted by: Gerald McNally | Aug 25, 2009 10:48:34 PM
I work at a law firm in Las Vegas. We have filed over 2000 cases this year, and over three thousand cases last year, chapter 7 and 13. I have met with every one of those clients and looked at their credit reports and heard their stories. I think you are right, my guess would also be 2%.
Posted by: Seth | Aug 26, 2009 5:56:46 AM
Thanks of shairing detail in this post is very lovely and beautiful.
Posted by: Foqia | Aug 28, 2009 4:18:24 AM
