Hundreds of thousands of people have been hospitalized with COVID-19, some for long periods of time. That comes with high medical bills.

Which leads to the question: Are these people turning to bankruptcy for relief from the debt? The answer: Not yet.

The bigger question and one that will come due before medical bills is: Will people have to declare bankruptcy because of the economic fallout from the pandemic? The answer: We’ll know soon.

First, a primer on bankruptcy. There are two main types – Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, everything a borrower owns is liquidated, including homes. Chapter 13 sets up repayment plans but allows the debtor to keep their property as long as they meet the repayment schedule.

Bankruptcy filings are down dramatically across the U.S. In Middle Tennessee, Chapter 13 trustee Henry Hildebrand says new filings have dropped from an average of 350-425 a month to about 120.

“When COVID hit and the financial (crisis) hit, people stopped filing bankruptcy, which is almost counterintuitive. When the pandemic hit, when everybody lost their job, they couldn’t afford to pay for a bankruptcy so filings dropped, and it’s been that way for a year and a-half.”

“I thought when the virus started we’d have to hire more people and it would be an avalanche, and it’s really been the opposite,” bankruptcy attorney Mark Podis says.

Contributing to the low bankruptcy filings is the relief many Americans got from the government in 2020.

“In the past year and a-half, there has been substantial government help, and that’s a good thing,” Hildebrand says. “There was a moratorium on evictions, there was a moratorium on foreclosures of government-backed loans. What I’m afraid might happen is that the mortgage servicers have to keep paying investors even though they’re not getting paid the mortgage payments and they can’t foreclose on the properties. What are they going to do when the dust settles and the government stops precluding the foreclosures?”

Pick your crisis

So, let’s look at the two major drivers in consumer debt right now – medical costs and the economic crisis.

More than 44 million confirmed cases of COVID-19 were reported since January 2020 in the United States, with more than 700,000 deaths. Not everyone who caught the virus ended up in the hospital, but those who did face a variety of medical bills if they survived.

And, of course, the families of those who did not still have to pay up.

Accurate real-time data on the cost of coronavirus hospitalizations isn’t available, but many studies estimate the average cost to be about $20,000.

The Kaiser Family Foundation estimates that for those with a respiratory condition requiring ventilation, the cost soars to $34,225 for less than four days on a ventilator and $88,114 for those requiring more than four days. Some require it for much longer.

Any way you slice it, that’s a lot of medical bills that will come due.

But the entire cost of medical care can’t be simply laid at the feet of the virus. Much of the major expense comes from people already suffering from underlying conditions such as kidney disease or cancer who also contracted COVID-19.

“I’m sure there’s been an increase in medical bankruptcies, and the virus has been part of it,” Podis explains. “In the beginning, a lot of people had underlying conditions and then, when they got the virus, it could have been part of their medical treatment. When they bring me their bills, it’s usually from an endocrinologist or some other specialty that’s been thrown in with COVID.”

But pushing ahead in the line is the economic cost of the pandemic. The Consumer Financial Protection Bureau estimates that as of March 2021 there were more than 8 million adults behind on their rent as a result of job loss or reduced hours. More than 2 million were behind on mortgage payments.

While government intervention programs including stimulus payments and other assistance slowed the hardship for many Americans, those programs are now gone or soon will be. And as of Jan. 1, the moratorium on foreclosing on those behind in their mortgage payments ends.

“Most pandemic filings (were) related to people who lost jobs,” Hildebrand adds. “Now it’s a child care issue. People can’t go back to work because they can’t get child care.”

Hildebrand expects the bankruptcy filings for economic hardships to increase before ones for medical debt.

“Here in Middle Tennessee the medical debt collection is very aggressive,” he says. “But it will take a while to see it. The doctors and hospitals will wait a little bit. You can’t squeeze blood from a turnip.”

Take action

As consumers face this two-headed monster, there is some help available.

As of Aug. 31, the Consumer Financial Protection Bureau required most mortgage servicers, usually banks, to tell their clients about repayment or other options to avoid foreclosure. But the Bureau urges people to reach out to their mortgage servicer rather than wait to be contacted, hoping the worst won’t happen. The further behind on mortgage payments consumers are the harder it will be to resolve the problem.

US News & World Report offers some measures people have to get help with medical bills.

Negotiate medical bills with the hospital or insurance company.

Check the bills for errors.

Understand medical debt relief programs. Some states and the federal government have ways to help lower your bills.

Contact the state health insurance department for options. The Tennessee State Health Insurance Assistance Program offers free counseling and assistance to Medicare-eligible individuals, their families and caregivers.

Communication is key in trying to resolve debt issues, Podis emphasizes, either medical or related to the economic downturn.

“I believe in trying to work your way out of the problem if possible,” he says. “I’ve always thought bankruptcy should be the last resort for folks. It’s hard to make it through a Chapter 13 bankruptcy, and it’s devastating to your credit.

“Most creditors just tell me they’re trying not to pursue people too hard during the virus and if people would communicate, they would work with them. It’s the people who go silent who are left with no options.”