Medical Debt: What You Can Include and Financial Impacts

2014-11-26

Donna Carson

A U.S. survey conducted earlier this year by NerdWallet Health found that medical bankruptcy accounts for the majority of personal bankruptcies. The study indicated that 1 in 5 Americans will struggle with their medical bills this year – and these statistics are in spite of the new Affordable Care Act.

Luckily, unlike the U.S., medical bankruptcy rarely accounts for personal bankruptcies or insolvencies in Canada. Other than an ambulance bill or specific medication that isn’t covered by your insurance provider, Canadians typically won’t owe money to a health care provider – whether a hospital, insurance company or otherwise. That being said, medical expenses not covered by Canada’s universal healthcare or your insurance provider can add up. If you’re struggling with medical debts, you may be wondering if they can be included in a bankruptcy or a Consumer Proposal.

The good news is, any medical bills you do have would be considered unsecured creditors and can be included as part of your debt relief strategy. Unless you have given a medical provider security over some of your assets, the medical creditors won’t have priority over other creditors. 

As stated above, it’s rare that medical bills alone will lead you to file a bankruptcy or Consumer Proposal. The cause is much more a result of whatever medical condition you are dealing with and the affect it has on your life. An illness or injury can impact your ability to work, or at least, to work full time. Without a steady income, it can be difficult to pay your creditors. Having a reduced income or even no income at all due to illness or injury may require you to live on credit, with no easy way to pay back your debts.

If you find yourself struggling with creditors due to a medical situation, perhaps to the point you’re thinking about bankruptcy, call one of our advisors at 310.DEBT(3328) or locate an office in your area to discuss your options.