Should I File Bankruptcy For Medical Bills?

Canada’s healthcare system is renowned for its universal care, covering a wide array of medical services. However, medical bankruptcy, a financial challenge resulting from healthcare-related expenses, is a reality that many Canadians face. This comprehensive guide will help you navigate the complex landscape of bankruptcy due to medical bills, shedding light on various aspects like out-of-pocket costs, loss of income, and the potential benefits and drawbacks of declaring bankruptcy.

Understanding Medical Bankruptcy

Medical bankruptcy does not occur solely due to unpaid hospital or doctor’s bills, which are typically covered by Canada’s healthcare system. It often arises from additional medical costs that are not covered by government insurance or employment benefit programs. These can include expenses for medicine, equipment, and lifestyle adjustments necessitated by a medical condition.

The Hidden Costs of Healthcare

Suppose you are dealing with a medical condition that requires special care or equipment, or perhaps medication that is not fully covered by your insurance. In that case, you will likely face considerable out-of-pocket costs. Additionally, you may have to bear the cost of relocating or modifying your home to accommodate your condition. All these expenditures can add up, potentially leading to financial strain.

Income Loss and Bankruptcy

One of the most significant financial challenges during a health crisis is the loss of income while you are off work for recovery. If your employer does not supplement your health insurance wages, and you’re reliant on sick benefits from Employment Insurance, you will receive only a fraction of your usual salary. This reduced income can drastically affect your ability to meet your living expenses, potentially leading you to consider bankruptcy.

Before You Consider Bankruptcy

When faced with mounting medical bills and reduced income, bankruptcy might seem like the only option. However, it’s essential to focus on recovery first. Stress from creditors’ calls can hinder your recovery process. Therefore, it’s crucial to remember that if you aren’t working, your wages cannot be garnished for your debts.

While pondering the question, “Should I file bankruptcy for medical bills?”, it’s critical to assess your monthly costs and overall budget. You might need to adjust your lifestyle to ensure your budget is manageable given your reduced income. Exploring all possible community resources and support can be beneficial in aligning your overall household budget with your medical expenses.

Can Bankruptcy Cover Medical Costs?

Yes, declaring bankruptcy can take care of medical costs. Here’s how:

  • Unsecured debts, including hospital fees and other unpaid medical bills, are included in a bankruptcy.
  • All income you receive while bankrupt is subject to the surplus income rules. So, if you are receiving sick benefits or disability income, that is considered part of your income.
  • Medical expenses that you pay directly can reduce your income. If you are paying for prescriptions or other expenses, these expenses will lower your surplus income obligations, subject to certain conditions that a licensed insolvency trustee can explain.
  • Declaring bankruptcy provides an automatic stay of proceedings and halts all creditor actions.
  • Bankruptcy can conclude within less than 9 months from filing, if it’s your first bankruptcy.
  • It eliminates your debt, offering you a fresh start.

Risks and Benefits of Declaring Bankruptcy

Bankruptcy can be a viable option for some, but it comes with its share of risks and benefits. It can provide immediate relief from financial pressure and grant you a fresh start. However, it can also negatively impact your credit score and make it challenging to secure credit in the future.

Alternatives to Bankruptcy

If you’re still wondering, “Should I file bankruptcy for medical bills?”, it might be worth exploring other options. Debt consolidation, consumer proposals, or even negotiating with creditors can provide viable alternatives to bankruptcy.

Navigating Personal Bankruptcy

Navigating personal bankruptcy can be complex. It requires a clear understanding of the laws, procedures, and potential repercussions. If you decide to pursue this path, it’s wise to seek professional assistance to ensure you make informed decisions.

Seeking Professional Help

If you’re overwhelmed with debt due to medical costs, reaching out to professionals from Bankruptcy Canada can provide you with several debt relief strategies. We offer free, confidential, no-obligation consultations to help you regain control of your finances and get your life back on track.


Facing financial challenges due to medical bills can be overwhelming and stressful. However, with the right information and professional help, you can navigate these challenges effectively. Whether bankruptcy is your best option depends on your individual circumstances. Always consider all possibilities and seek professional advice before making such a significant decision.

Should I file bankruptcy for medical bills? The answer isn’t straightforward, but with careful consideration and professional guidance, you can make the best decision for your financial future.

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