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Debts from a serious health issue may require a Chapter 7 filing

| Mar 27, 2021 | Bankruptcy

A job loss or temporary layoff not only reduces income, it may also result in losing a health insurance plan. If a serious illness or medical condition develops while unemployed, a trip to the emergency room could cause overwhelming financial problems.

One in four American adults surveyed by Gallup stated they would need to borrow the money to pay a $500 medical expense. Accordingly, 12% of respondents claimed they would use a credit card or take out a personal loan from a bank. While it may seem uncomfortable to ask a friend or relative to borrow $500, 14% of respondents admitted they would need to do so.

Medical bills cause concerns for many Americans

Concerns about needing to file bankruptcy because of long-term medical debt affected half of the U.S. adults surveyed by Gallup in 2020. This number represents a 5% increase from the adults surveyed in 2019.

Healthcare expenses often take longer to pay off because of the time required to treat an illness or medical condition. An individual making regular visits to a doctor, for example, may not have the ability to search for a new or better-paying job.

Bankruptcy may provide much-needed relief from unmanageable debts

Without savings or sufficient income, bills may continue to pile up and become difficult to manage. As reported by USA Today, more than half of American adults had unpaid medical debts sent to a collections agency. Five percent owed over $50,000 while approximately 65% owed $5,000. Debts in these amounts lead to anxiety and stress in many struggling households.

Some individuals mistakenly believe that a bankruptcy may permanently ruin their credit or cause them to lose their property. The right type of filing, however, may allow individuals to keep their homes, vehicles and businesses while also relieving the pressure of mountainous debt.

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