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Medical debt is number one cause of bankruptcy filings

On Behalf of | Feb 20, 2014 | Chapter 13 | 0 comments

Some people in Louisville think bankruptcy is something that cannot happen to them. They have a good job with medical insurance and have their finances under control. Then they get sick or have other health related problems. And the medical expenses begin. And if their illness or medical condition is severe enough, they may no longer be able to work. And without a job, they may lose their insurance coverage.

As the bills mount, they think how this could have happened. And then they start to think about bankruptcy. Medical bankruptcy is a rising problem. A study from last year found that it was the leading cause of new bankruptcy filings, exceeding both mortgage and credit card debt.

You may believe that because you have medical insurance, you do not need to worry. One source notes 78 percent of medical bankruptcies involve individuals with health insurance.

Medical costs can be extreme, with high-deductibles and numerous co-pays that quickly add up. One example details $8,500 in non-insurance expenses for a breast cancer sufferer. This is happening in combination with lost time at work and other expenses, like traveling for treatment.

If you find yourself in this situation, you should meet with a bankruptcy attorney and examine your finances and medical issues. A bankruptcy filing can help with your medical debt, but you need to determine whether a Chapter 7 or a Chapter 13 will provide the right kind of relief.

Before you file, you need to determine if your medical problems have improved enough to allow you to return to work, and that you are not still accumulating new medical debt.

Because you cannot quickly refile another bankruptcy after your Chapter 7 discharge is granted or your Chapter 13 plan is completed, you want to be sure that your medical debt will not reoccur.

Source: Foxbusiness.com, “Medical Bankruptcies are Still a Problem, Here’s What to Expect,” Donna Fuscaldo, February 18, 2014