When Arizona residents create their household budgets, they may try their best to keep some money aside for unexpected expenses. Unexpected expenses could cover many things, such as losing a job or a sudden death or illness in the family.
According to a recent one of its kind study conducted by a price comparison website, approximately 10 million adults across the country with health coverage will accumulate medical bills that they will be unable to pay off. These numbers are for people with around the year coverage, not accounting for the people who cannot afford insurance and face even higher medical bills.
These statistics may be the reason medical bills are emerging as the number one cause for bankruptcies across the country. The study found that bankruptcies caused by unpaid medical bills will affect 2 million people this year alone. When it comes to dealing with financial hardship, Arizona residents can choose to file either Chapter 7 orChapter 13 bankruptcy. In a Chapter 13 bankruptcy filing, filers with a steady but low income can work out a court supervised payment plan that takes into account their financial ability, allowing them to repay their bills but at their own pace.
In addition to the households comprising of 1.7 million people expected to file for bankruptcy this year, the website also cautions that 56 million adults will struggle with health-care related expenses this year. That means 20 percent of the population between 19 and 64 will accumulate health care bills they are unable to pay off.
These affected might be using their credit card to pay them off, and more than 11 million people are estimated to take on credit card debt to cover medical bills. Unpaid credit card balances may lead to higher interest rates, perpetuating the debt cycle Arizona residents may find themselves in. The study also found that once people have maxed out their credit cards on medical bills, the next step they take is not filling prescription medicines, which could make their health worse.
Arizona residents facing mounting bills and considering risking their health should be aware that they have legal options available to them in the form of bankruptcy protection. They should take appropriate steps to restart their financial life in a manner that doesn't cause them their physical health.
Source: CNBC, "Medical bills are the biggest cause of US Bankruptcies: Study," Dan Mangan, June 25, 2013