Is Bankruptcy a Solution for Medical Debt?
According to the latest statistics, overwhelming medical debt is the number one contributor to bankruptcies across the nation. More than 60 percent of those who apply for bankruptcy cannot pay medical debt and costs that now compose over 15% of the United States GDP. Unexpected illness or injury costs the average privately insured family approximately $17,000 versus $26,000 for the uninsured. For those drowning in medical debt, bankruptcy is a tempting solution and last resort.
Those considering bankruptcy will want to calculate whether more medical expenses are approaching. If so, it would be tactful to delay filing for bankruptcy to ensure that all medical debt is incurred. After all, only the outstanding debts at the time of filing will be discharged. Some questions that arise about medical debt and bankruptcy include:
- What if I’m insured? Approximately 80 percent of those who file for bankruptcy because of medical debt are insured. There can be complications in filing such as an insurance company paying too slowly. Insurance is not a guarantee against debt and medical bankruptcy can come from anywhere. Approximately 60% of people who file for it went to college and 66% of them own a home.
- Can’t I just pay off medical bills with a credit card? Yes, people must also consider the interest rates and other complicated fees that come with a credit card. Paying off medical debt with a credit card often time leads to a net increase on the amount owed. You may temporarily solve your problem, but total debt expands.
- Should I choose Chapter 7 or Chapter 13 bankruptcy? Speaking with a Fort Worth bankruptcy attorney will help you determine which chapter best suites your situation. Chapter 7 will liquidate assets to pay off debts while Chapter 13 focuses on reorganization of debts before a discharge after the grace period.