Individuals and families faced with an overwhelming amount of health care bills may have fallen behind because their illness forced them to lose an extended amount of time from work. A Chapter 7 bankruptcy may provide relief by eliminating unpaid medical debts.
Medical issues contribute to nearly 67% of personal bankruptcies, as reported by CNBC. Even with an employer-sponsored health insurance plan, many filers find themselves struggling because of unaffordable out-of-pocket expenses or co-pays.
Unexpected medical emergencies may trigger a financial downfall
According to the CNBC report, about 60% of Americans do not have the money to cover an unexpected emergency. An unplanned visit to a hospital’s emergency room may cost several thousand dollars, which only 40% of the U.S. population has the means to pay.
In many cases, as medical bills pile up, an individual recovering from an illness or an emergency procedure cannot work. The loss of income sets off a downward spiral, and a household begins to suffer financially. Families may begin to forgo making credit card or mortgage payments to afford pressing and immediate necessities.
Medical debts may fall into collections and require relief
Some individuals have a difficult time going back to work and then catching up on their unforeseen medical debts. By the time many employees return to their normal work schedules, hospitals and health care practitioners may have already sent unpaid medical bills to debt collectors.
As reported by USA Today, a study revealed that almost 20 million Americans had a combined $45 billion worth of health care bills sent to agencies for collection. While collectors have a right to seek payment, debtors also have a legal right to relief through a Chapter 7 bankruptcy. A discharge of debts may provide a petitioner with a much-needed fresh start.