The leading cause of bankruptcy is not overspending, nor lack of adequate financial planning, but the financial free fall caused by a health crisis. Despite recent advances in the health care policy, American households continue to struggle with medical debt, and it’s only getting worse. Americans are putting more of their take-home pay toward medical costs than ever before and, oftentimes, are not keeping up. Medical debt collected by third-party collections agencies is roughly three times as large as financial and credit card debt combined underscoring how many Americans are struggling.
Medical bankruptcy doesn’t just happen to the uninsured. In fact, research shows that many people who file for bankruptcy do so because of exorbitant medical costs not covered by their existing health insurance – 78% of people that file for medical bankruptcy have insurance. However, the policies many Americans are able to afford come with high deductibles and co-pays, and do nothing to cover missed hours from work and travel expenses. As a result, medical debt can become insurmountable quickly.
The rising cost of health care and the growing number of Americans without adequate health insurance coverage has led many people to file Chapter 7 bankruptcy to eliminate their medical debts. If you qualify for a Chapter 7, medical debt is considered a non-priority, unsecured debt, which means that the debt can be wiped out when you receive your discharge. If you do not qualify for Chapter 7 based on your income, a Chapter 13 reorganization may be an option in order to set up a reasonable payment arrangement until you get back on your feet again.
If you have questions regarding your options with regard to bankruptcy, contact the Peoria Illinois Law Offices of Charles Covey for help. For 30 years, Charles has worked on the behalf of clients who are struggling with difficult debt challenges. He uses his extensive knowledge of the U.S. Bankruptcy Code and years of successful experience to find the best strategy for his clients. Contact us today for help.