Medical debt surpasses credit card debt as one of the leading contributors to bankruptcy in the country.
Many people associate bankruptcy with excessive credit card debt, upside-down mortgages and general overspending. There is another root cause of bankruptcy, however, that some may not consider. According to Roll Call News, medical debt has become the most common cause of bankruptcy in California and across the nation. In fact, at least 62 percent of people who filed for bankruptcy in 2014 indicated that medical debt was the primary reason for their financial ruin.
A look at medical debt
A considerable number of people across the U.S. are forced to live with chronic medical conditions that require them to receive expensive treatment, take pricey medication and/or undergo surgical procedures. Although the Affordable Care Act requires Americans to carry medical insurance coverage, not everyone is able to afford the high cost of insurance premiums, copays and deductibles. While some people struggle to keep their insurance, others simply go without. As a result, many accumulate a significant amount of medical debt that they are unable to pay off. Surprisingly, many of the people who declared medical bankruptcy had insurance coverage when they filed.
According to a CNBC News report, unpaid medical expenses led at least two million people to file for bankruptcy in 2013. Furthermore, an additional 56 million people suffered from medical debt but did not file for bankruptcy that year.
People who must deal with overwhelming medical expenses and wish to file for bankruptcy have several options. One option is to file for Chapter 7 bankruptcy, which in many cases allows people to wipe away their medical debt and start with a clean financial slate. People who choose this route must create a financial plan that will keep them from accumulating even more medical debt and falling into the same pattern. According to the United States Courts, people can only file for Chapter 7 once every eight years.
Chapter 13 bankruptcy, on the other hand, reconfigures filers' debt so that they can make payments on the money they owe. People may be able to reduce the interest rates on their medical bills, consolidate their expenses and even work out special terms with creditors under this form of bankruptcy.
Choosing the best legal option
When you are overwhelmed with medical debt, it can be difficult to make crucial decisions regarding your financial matters. A bankruptcy attorney in Orlando may be able to look at the details of your case, and help you select an option that best meets your needs.