Feb. 6–Sara Baldwin filed for personal bankruptcy last month, not because she doesn’t work and not because she went on a credit-card binge.

Baldwin, 38, filed for bankruptcy because life can change in a microsecond.

In 1993, she was riding in a car in Salt Lake City. A 16-year-old who had had his driver’s license less than three weeks T-boned her car at 60 mph.

Baldwin survived only to endure 12 painful surgeries, including painful procedures to realign her jaw and remove her tailbone. Baldwin could not work from December 1993 to May 1998.

“Most of that time I was in a mental fog,” said Baldwin, who lives in Aurora.

The auto insurance settlement she received didn’t cover her medical expenses. She does not know how her husband — now ex-husband — handled her affairs during her recovery. All she knows today is that she still has hundreds of thousands of dollars in medical bills.

“I did not want to file for bankruptcy,” Baldwin said.

For the past three years she’s worked as a gate agent for Frontier Airlines. But interest on her unpaid balances grows faster than she can pay.

“I am always stressed out, thinking, ‘Oh my gosh, who is going to call and ask for money?’ ” she said.

It would be nice to think of Baldwin as an isolated tragedy. But many middle-class Americans are just a car crash or heart attack away from bankruptcy.

Medical bills contribute to about half of all personal bankruptcies, according to a study published Wednesday by legal and medical researchers at Harvard University. Nearly one-third of the bankruptcy filers they interviewed said health issues caused their insolvency.

The researchers surveyed 1,771 people who filed for personal bankruptcy in five federal courts in 2001. Nearly 1.5 million filed for bankruptcy that year. Nearly 1.6 million filed last year. If the Harvard research holds true, about 800,000 of those cases stem from medical debt.

Why don’t these people get health insurance? Shockingly, 75 percent of those surveyed had insurance.

A teacher suffered a heart attack and lost her job and benefits amid a long recovery. A hospital wrote off $20,000 of her debts, but she was still bombarded with doctor and pharmacy bills.

Another filer had lung surgery and a heart attack. He had to leave his job because it was too demanding. He found a new job but was denied coverage because of his “pre-existing condition.” “I wish I could say that this was a story of people who went to the mall and bought too many GameBoys,” said Harvard law professor Elizabeth Warren, who co-wrote the study. “A broken health-care system is bankrupting middle-class America — and neither the insurance companies, nor the credit industry, nor Congress wants to admit that.” Denver bankruptcy lawyer George Carlson said he sees steep medical bills in a quarter of the cases that come to him. Medical issues are hard to detect because people use their credit cards to pay these bills, he said.

Another Denver bankruptcy attorney, Jan Hammerman, said many cases he sees stem from the lack of high-paying jobs in Denver. People are often driven to start their own businesses and fail because they are undercapitalized. “A lot of these people are not carrying insurance and are very much at risk,” he said.

Congress has been wrestling with bankruptcy reform for nine years. Typically, credit-card companies push for laws that would make it harder for people — not corporations — to file for bankruptcy.

“If the big credit-card companies want to curb their losses, they could restrict credit cards,” Carlson said. “Instead, they hand them out like candy.” Last week, Sen. Charles Grassley, R-Iowa, unveiled the latest bankruptcy reform bill with the usual rhetoric: Bankruptcy “was not intended to be a convenient financial planning tool where deadbeats can get out of paying their debt scot-free while honest Americans who play by the rules have to foot the bill.” Scot-free? Deadbeat? Not an “honest American.” Baldwin has heard it before.

“People need not be so quick to judge,” she said. “Just because you file bankruptcy doesn’t mean that you are a horrible person.”

Al Lewis‘ column appears Sundays, Tuesdays and Fridays. Reach him at 303-820-1967 or alewis@denverpost.com.

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