Medical expenses lead as top cause for personal bankruptcy

Medical expenses lead as top cause for personal bankruptcy

According to a study from 2013 by NerdWallet Health, medical bills are expected to be the number one cause of personal bankruptcies, surpassing both credit card debt and mortgage debt. Research shows that bankruptcies related to medical expenses happen to both people who are uninsured as well as those that are insured. Up to seventy-eight percent of people who file for personal bankruptcy because of medical expenses have insurance. High deductible health-insurance plans, as well as the high costs of co-payments and co-insurance, in addition to the high cost of medical services, are primarily to blame for the troubles encountered by those in Arizona and across the country.

In this struggling economy, many people have faced unexpected life changes and facing an unexpected illness is certainly not an enviable experience. For those facing financial challenges and wishing to eliminate debt, different options may exist to help. One option for debt relief is personal bankruptcy. There are two primary types of personal bankruptcy which include Chapter 7 bankruptcy and Chapter 13 bankruptcy.

A Chapter 7 bankruptcy filing allows the filing party to liquidate non-exempt assets to repay creditors. A Chapter 13 bankruptcy filing allows a filing party with a reliable source of income to reorganize existing debt into manageable payments to be repaid through a repayment plan. The goal of each is for the filing party to enjoy debt relief. The party filing for bankruptcy may be able to receive relief from various types of debt, including unpaid bills and medical expenses.

Because there are requirements to file for each type of individual bankruptcy, it is best for the party considering filing for bankruptcy to understand the options available. A trained bankruptcy attorney here in Mesa can help a party considering bankruptcy evaluate which option is best for that party given the party's circumstances and goals for the process.

Source: Fox Business, "Medical Bankruptcies are Still a Problem, Here's What to Expect," Don Fuscaldo, Feb. 18, 2014

Categories