Should I file bankruptcy for medical bills?

_{By Bromwich+Smith Staff | 661 words | Reading Time: 3 minutes | Date: 2022/05/24}

As Canadians we assume that all things related to our health care are free and as a result medical bankruptcy does not occur in Canada. Unfortunately, this is only partly true as although hospital visits and doctor’s bills are covered by Canada’s health care system; there can be other medical costs and healthcare issues that can cause severe financial challenges. 

Other forms of medical costs can be out of pocket costs for medicine and equipment that is not covered by government insurance or work benefit programs. At the same time, you may incur moving expenses or household upgrades to accommodate your medical condition.

At the same time your biggest expense will be a loss of income while you are off work recovering from your medical condition. If your employer does not “top up” your health insurance wages, sick benefits from Employment Insurance will cover only a portion of your salary. This can put a large strain on your overall living expenses for you and your family. 

What you should know before thinking about bankruptcy

First of all, recovery is the most important focus before thinking about how to pay for your medical bill debts. If creditors’ are calling, that can be very stressful while you or your loved one are trying to recover but keep in mind that if you aren’t working, your wages will not be garnished for your debts.  So take the time to consider if declaring bankruptcy to pay off your medical bills will be a good option for you or not.   

While you are considering this, take account of your monthly costs and see if you can manage your overall budget to get it into a balanced place so that you are not relying on credit.  If your medical condition is keeping you from returning to work, you may have to adjust your current lifestyle to ensure your budget overall is manageable. Perhaps you have the opportunity to downsize your current home or move in with family or friends. Ultimately it is a good idea to explore all possible community resources to help support you during this time to determine if you can align your overall household budget with what is going out for your medical expenses. 

If you still are facing debt after making these financial changes, declaring personal bankruptcy could be an option for you. 

Can declaring bankruptcy take care of medical costs?

The answer is yes, and here are few things to consider:

• Unsecured debts are included in a bankruptcy, including hospital fees and other unpaid medical bills;
• While bankrupt all income you receive is subject to the surplus income rules, so if you are receiving sick benefits or a disability income, that is part of your income;
• Medical expenses that you pay directly can be used to reduce your income, so if you are paying for prescriptions or other expenses, those expenses will reduce your surplus income obligations, subject to certain conditions that your licensed insolvency trustee will explain. 
• Bankruptcy immediately gives you an automatic stay of proceedings and stops all creditor actions.  
• Bankruptcy can be over within less than 9 months from filing, if it’s your first bankruptcy.
• Eliminates your debt and gives you a fresh start.

If you are struggling with debts related to medical costs and feeling financially overwhelmed, we are here for you. Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page. We want to see you flourish!