Chances are, if you are part of the American working and even middle class, you may have either filed bankruptcy or you may know someone who has. If so, you know that filing bankruptcy is not a choice that anyone prefers to make. Still, the options available to Americans today are vastly superior to those from the 19th century where things like indentured servitude and debtor’s prisons could be a consequence of financial hardship.
Today federal bankruptcy law provides what the United States Supreme Court described as offering “the honest but unfortunate debtor…, a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.”  Modern law allows the debtor to re-order their finances, to be protected by what is called the “automatic stay” from the efforts of creditors and debt collectors to be paid and ultimately to be relieved of the burden of debt entirely upon discharge. 
So, who is “the honest but unfortunate debtor” today? In 2005, Congress enacted bankruptcy reform legislation aimed at insuring filers who were in need of protection by introducing “means testing.”  During the financial crisis of 2007 bankruptcy filing spiked,  but now with unemployment at record lows and backed by a strengthening economy, who is filing? Many times, it’s people with high medical debts. That’s who.
The portrait of American bankruptcy may not be what you would expect. The number one reason Americans file bankruptcy today is not gambling addiction or lavish spending on luxury items, it is high medical bills.  And studies find that today’s typical bankruptcy filer is sincerely “honest and unfortunate” insofar as many of them are employed, some with more than one job. Many of those filing because of high medical bills even have health insurance. 
This brief look at the portrait of American bankruptcy historically in comparison to today, yields a paradox. Today, experts debate whether access to affordable health care is a basic human right, an issue which is far from resolved. While that debate rages on, it is in fact, the rights Americans have under federal bankruptcy law which appears to be filling in.
About the Author
Angela Horn is a contributor to national publications including Longterm Living, Healthcare Finance News, HFM Magazine, Credit and Collections Risk, Fierce Health Finance, and Becker’s Hospital Review on the topic of probate, bankruptcy, and claimants’ rights. Ms. Horn has more than 18 years of experience practicing in probate and probate litigation. She is a recognized probated expert, speaking to national and regional trade groups across the U.S. She has also participated as an expert panelist in the Federal Trade Commission’s Workshop on Debt Collection and Technology. Ms. Horn is a member of the American Bar Association’s Estate and Trust Division. She has a J.D. from Lewis and Clark University where she graduated Cum Laude and a B.A. from the University of Minnesota, graduating Phi Beta Kappa. She is admitted to practice law in New York, Minnesota, U.S. District Court, District of Minnesota.
 Local Loan Co. v. Hunt, 54 S.Ct. 695 (1934).
 11 U.S. Code § 362, 524.
 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 - Title I: Needs-Based Bankruptcy , Public Law No: 109-8 (04/20/2005)
 Money.cnn.com “Bankruptcies jump 40 percent in 2007” (January 3, 2008).
 “Why Americans are Drowning in Medical Debt” The Atlantic (Oct 4, 2014); “Health Care Costs Are the No. 1 Cause of Bankruptcy, How Medical Bills Devastate America's Families” The Balance (May 11, 2017) ; “Top 10 Reasons People go Bankrupt” Huffpost (March 24, 2015). “This is the Number One Reason Americans File for Bankruptcy” The Motley Fool (May 5, 2017).
 “Even Insured Can Face Crushing Medical Debt, Study Finds” The Upshot (Jan 5, 2016); “medical Bills Still take a Big toll, Even With Insurance” Shots, health News From NPR (March 8, 2016).