Medical Emergencies: Leading Cause of Bankruptcies in America

There are several reasons people file for bankruptcy. What may come as shocking news is that most people are a SINGLE major health issue away from considering bankruptcy as an option. How can this be when majority of families have some form of health insurance? For one thing, it all depends on a number of circumstances. Here are a few examples of what needs to be considered:

• What type of insurance you have
• What sort of medical issue you have
• What is the co-pay percentage

Medical bills are actually the biggest cause of bankruptcies within the United States. In 2013 alone, almost 2 million people had filed for bankruptcy citing medical bills as their reasons. Even health insurance provides minimal help in preventing these cases.

Why?

One reason is that the average co-pay in most plans is 20%. This works out well for check-ups and minor injuries but if you happen to contract a major illness or get in a serious accident, you could possibly rack up a bill over $50,000 where you would need to cover 20% or $10,000 along with the deductible. For just about anybody, this would be a life-changing tragedy that necessitates seeing a bankruptcy lawyer.

Who are affected?

Of those who have stated medical bills as their reasons for filing bankruptcy, 78% of them had medical insurance of some sort. Most of those affected were educated middle-class families. 1 out of 5 Americans will face problems paying medical bills this year. Accidents and life-changing diagnosis can happen to anybody.

Even with proper savings and good spending habits, the burden of some medical bills is simply too much for most people to handle. This is a problem that an estimated 56 million Americans will need to face this year alone.

What can happen?

Seeing as most health care institutions employ their own means of collecting debts, overdue health bills are treated the same way as other types of debt regardless of the fact if you are now incapable of maintaining your job due to your health issue. You can expect similar means of debt collection such as multiple phone calls, court ordered actions, and other harassing techniques.

How to address the issue?

Bankruptcy is, and should always be, considered as the final option and should only be seriously considered once all other options are exhausted. Lawyers that specialized in bankruptcy are also experts when it comes to finding working solutions for debts. Your best course of action would be to seek the assistance of a bankruptcy lawyer as soon as you are facing a massive medical bill.

The common belief is that credit card debt or mortgages are the main causes for filing for bankruptcy. Most people are caught blindsided by such big bills that they find themselves at a loss for what to do. Simply having the knowledge that 3 out of every 5 bankruptcies are caused by medical bills is already a good start. Knowing is always half the battle and it always beats being caught off-guard.

Bankruptcy – Adding Insult to Illness and Injury

“Debt can feel like the heaviest burden in life.” ~ Suze Orman

Declaring bankruptcy is a very serious action with stressful consequences even beyond the challenges of life before filing for bankruptcy and credit repair after bankruptcy. Unfortunately, this still seems to be the only way out of debt for millions of American families every year.

It is especially shocking that the major cause of bankruptcy in the U.S. is medical bills. And even more shocking is the fact that most of those forced into bankruptcy by medical expenses actually had medical insurance!

Modern medicine is becoming more and more expensive for patients due to hi-tech procedures and methods of medication, vaccination, surgeries and diagnostics. In fact, it is becoming financially more and more difficult to afford advanced treatments for the majority of the population. In addition, many times unexpected or unpredictable side-effects are on the increase, which simply means extended care and more expenses.

Traps of Health Insurances

And if it is not enough to become seriously ill or injured, unable to work, with job and income in jeopardy, it also seems like the health insurance companies do not really stand by their clients’ side when most needed. Too many times an insured individual doesn’t even realize the extent of uncovered medical conditions until the doctor’s office/hospital checks the insurance policy and starts sending bills. And it doesn’t really make any difference if you were paying your premiums for decades and never used your insurance to cover a medical bill before.

Clever rules (hidden in fine print), including high co-payments and deductibles the health insurance companies use, are written not just to make a decent return, but to make vast profits for medical insurance providers, not to support the insured and their families in times of need.

At the same time, approximately 9 million children in the United States are uninsured. Parents do not take them to the doctor at the first signs of disease because they are afraid of the cost. In some cases, the child’s illness worsens to the point where the parent is forced to miss work or even quit a job to nurse the child until it gets well again. Unfortunately, nursing a family member (by a family member) back to health does not help this family’s financial health in any way.

In short, one can lose everything because of illness in the richest country in the world – and the only advanced country with no universal health insurance. That is not very likely to happen in Canada or Europe, where medical insurance is separated from employment.

Major Cause of Bankruptcy

Several studies show that medical expenses are a major cause of bankruptcy in the U.S. not just among the poor, but also among the middle and working class – families who often have medical insurance. For most uninsured the insurance premiums are simply unaffordable.

Since a bankruptcy stays on one’s credit report for a decade, it makes other payments like mortgage and car insurance more expensive or even out of the reach, and makes applying for another (much needed) job much harder. Many debtors continue having troubles paying their mortgage or rent and utility bills, all that mirroring in emotional and financial exhaustion.

“During the two years before filing 40.3 percent had lost telephone service; 19.4 percent had gone without food; 53.0 percent had gone without needed doctor or dentist visits because of the cost; and 43.0 percent had failed to fill a prescription, also because of the cost. Medical debtors experienced more problems in access to care than other debtors did; three-fifths went without a needed doctor or dentist visit, and nearly half failed to fill a prescription.” (David Himmelstein, Health Tracking Marketwatch)

The Abuse Prevention and Consumer Protection Act of 2005 was supposed to prevent abusive bankruptcies. What it really did was make the filing process harder. “Harder not just in terms of requirements, but in also that filing became harder to afford.” (Gayle Ronan, MSNBC.com)

According to Boohaker (bankruptcy attorney and a certified financial planner) ‘the biggest misperception surrounding bankruptcy remains that bankruptcy is a lifestyle choice overspending consumers use to absolve themselves of debt obligations so they can spend anew.’ She says that typically, ‘any excessive use of credit occurs after a catastrophic event like a divorce, job loss or medical issue sends them scrambling to pay bills.’

These unhappy events are not something anybody wants in their life but they do happen at least once in a lifetime to most people. Therefore, an act, even though it dictates protection in its title, is not really protecting or helping the ones who are unfortunate enough to need the help.

Alternatives

In Western societies most people believe that the health-care system is accountable for responding and taking care in times of uneasiness or disorder. These so-called modern civilizations were training their citizens for centuries to become more and more dependent on different institutions and medical care is no exception. Luckily, there are still different choices available to anyone who is open for possibilities and willing to take charge and responsibility.

Naturopathic and holistic health procedures are a lot more user-friendly and by far cheaper than traditional biomedicine’s ones. They take into account the whole life-style (body – mind approach) which means the improvement of our eating and exercising habits, the elimination of addictions and the adoption of a healthier attitude toward life. This alternative approach to wellness can greatly reduce if not completely eliminate most disorders. It’s easy to find the best providers: just ask at your local health-food store.

For those who are ready to take charge of their lives completely, some more research in the area of ‘working with the Secret’ or the ‘Healing Codes’ would be something to look into. Choose to live your life the way you want and at the same time be happy and healthy, without being dependent on any-one or any-thing – whenever possible.

Reasons To File For Bankruptcy

Although no one likes to admit it, financial problems are very common. Financial problems occur for a variety of different reasons. Whether it is because of overwhelming medical bills or being laid off work, financial troubles can easily occur. The question then becomes, when is filing for bankruptcy the only way out? People often wonder under what circumstances they should actually file bankruptcy. Here are some simple guidelines that can assist you in making that decision.

If you are overwhelmed with debt you can no longer pay, bankruptcy might be a viable option for you. When you wipe your debt completely clean, it is called discharge of debt. The goal of this is to help reduce your overall debt and allow you to start again with a clean slate. Whether you choose to go with Chapter 7 Bankruptcy (straight bankruptcy) or Chapter 13 Bankruptcy (reorganization), most, if not all of your debt will be wiped out.

If your home is currently in foreclosure, bankruptcy can help to stop the foreclosure process any time before the actual sale of the house. However, filing bankruptcy will by no means wipe out your current mortgage. Bankruptcy will help you create a repayment plan for the payments you are behind on.

Bankruptcy can help you keep your car and other processions from being repossessed. Even if your car has been repossessed by the bank, when you file bankruptcy you can actually force them to give you your car back. However, this is only the case if bankruptcy is filed promptly and quickly enough. Any payments you are behind on will then be consolidated into a bankruptcy plan. After you have filed bankruptcy and a plan has been made, your payments will go directly to a bankruptcy trustee, instead of going directly to a finance company.

Bankruptcy can help to eliminate extremely high medical bills. Unfortunately, there are times when medical bills, whether due to an accident or major illness, can get to the point where you can no longer pay for them. If you choose to file Chapter 13 bankruptcy, then your overall medical bills can dramatically be reduced.

One of the most common reasons people file bankruptcy is because loss of work. Families can easily become comfortable with the income they are making, whether it is a single or dual income family. Then, if the unthinkable occurs and you become unemployed, bills can quickly pile up. Often times, losing your job can be directly related to a medical reason. Therefore, with high medical bills and no income to pay them or other bills, bankruptcy may be the only viable option to get out from under the bills.

Bankruptcy can stop the harassing phone calls and letters from creditors. Often times, creditors do not follow the rules when trying to collect a debt. Creditors will continuously call the home and act very inappropriately with abusive and demeaning behavior.

If you are unable to pay your utility bills and are close to having them shut off or have already had them shut off, then bankruptcy may be your way out. Filing bankruptcy can help keep your electric and other utilities from being shut off.

Student loans are another source of overwhelming debt. Although student loans will not be completely eliminated through bankruptcy, it can help to consolidate your loan leaving you with a more manageable payment.

Wage garnishments can be stopped through Chapter 7 Bankruptcy. Wage garnishments often make it impossible to purchase essential items for your family. Bankruptcy can help keep food on the table by ending the wage garnishments.