Predatory Hospital Billing Tactics: Protecting Your Finances

Understanding the link between aggressive hospital billing tactics and medical bankruptcy is essential for anyone navigating the American healthcare system. In over two decades of practicing bankruptcy law and extensive research, I have seen how medical debt dismantles more middle-class lives than perhaps any other financial burden. Even for those with insurance, high deductibles and uncovered prescriptions often lead straight to the bankruptcy court.

However, there is a more immediate threat lurking in the hospital admissions office: predatory collection strategies. Hospitals are businesses, and many have adopted “upfront” billing practices that border on fraudulent. Below, I’ll explain how to protect your liquid assets during a medical crisis and avoid the common traps that lead to financial ruin.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Updated on January 18, 2026.

Listen: The Professor’s Audio Briefing.

Key Points: The Medical Debt Crisis

• The Bankruptcy Surge: Medical bills and associated income loss are leading causes of filing for bankruptcy in the U.S.
• The Debit and Credit Card Trap: Providing a credit or debit card for “identification” can result in unauthorized, immediate charges.
• Consent vs. Identification: Hospitals only require your ID and insurance card, not a payment method, to provide emergency care.

The Evolution of Hospital Billing and the Debt Trap

When I first started practicing bankruptcy law, I realized a majority of my clients had debt related to medical bills. But I found another trend more disturbing, and that was medical billing practices by hospitals.

I have represented dozens of clients who shared the same “outlandish” story: they were asked for their driver’s license and a credit card to “verify their identity” at admission. Later, they discovered the hospital had maxed out their credit card or drained their checking account before they were even discharged.

Professor’s Note: Hospitals use “financial counselors” who often appear as helpful advocates but are essentially high-pressure debt collectors working from within the clinical setting. Their goal is to secure payment before you see the final bill or have the chance to dispute the charges.

I will also note this billing tactic wasn’t local because when I relocated to the Jacksonville area, I heard the same stories. The only difference was that I was living four hundred miles from Miami. Different town, different debtors, same result.

A Tale of Extremes: Over-Testing, Under-Insuring, Over Billing

Our healthcare system incentivizes profit over patient stability. I saw this firsthand with my father; because he had Medicare, he was often kept for days of unnecessary observation. Conversely, I’ve seen motorcycle accident victims discharged prematurely because they lacked insurance.

When the hospital sees a “payer,” they maximize the stay. When they see a “liability,” they prioritize the exit. In both cases, the patient is the one left suffering from the financial wreckage.

The Myth of the Credit Card Dispute

You might think, “I’ll just dispute the charge with my bank.” As someone who has handled these disputes, I can tell you: it is a marathon, not a sprint. I once spent a year fighting for a $200 refund on my card. Imagine trying to dispute $10,000 while dealing with a physical recovery.

If the hospital can show you were physically present and received services, the credit card company is unlikely to side with you. Once that money is gone from your checking account, your ability to pay rent or your mortgage vanishes instantly. If it is charged to your credit card, bankruptcy is the likely result.

The Pandemic Aftermath and the Statute of Limitations

During the COVID-19 pandemic, the federal government covered many direct hospital costs, but no one covered the loss of income for the months that followed. Borrowers used credit cards, personal loans, and SBA loans to survive.

Now, in 2026, we are seeing a surge in bankruptcy filings because the statute of limitations on that “survival debt” is expiring. Creditors are getting aggressive, and hospitals are becoming even more predatory in their collection efforts to recoup lost revenue.

Debt Strategy: Protect Your Accounts Before You Arrive

When my wife visits urgent care, I give her one specific instruction: Leave the debit and credit cards in the car. To receive care, the facility only needs:

1. A Government-Issued ID (To verify who you are).
2. A Health Insurance Card (To verify who pays).

By law (EMTALA), hospitals must stabilize you in an emergency regardless of your ability to pay. They do not have the right to demand a credit card as a condition of treatment, although they might argue it’s to prove your identity.

Summary: Caveat Emptor (Buyer Beware)

No one chooses to get sick, but you can choose how you interact with the hospital’s billing department. Treat every hospital visit like a high-stakes financial transaction. Protect your cards, scrutinize your statements, and remember that your financial health is just as vital as your physical recovery. If the hospital is adamant, then make clear to them that you will be recording their conversations with you.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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February 4, 2025.