There is the old thought that when the economy goes bad, houses go into foreclosure, jobs are lost, insurance cannot be afforded, medical bills pile up, and some big spenders accumulate thousands in credit card debt just to survive.
Those very well may be connected beyond just the money problems, but when you focus on the money and do the research, bankruptcy itself can be a scary proposition.
Scary in that, the majority of bankruptcy filers are in fact not doing so necessarily because of job loss or home foreclosure.
The real numbers are tricky. A recent study posted on The Atlantic website pointed out if you have a medical condition you are more likely to file bankruptcy. The study said in 2009 you were 50% more likely to file bankruptcy if you had a medical condition. In fact, medical bills — not mortgages, not unemployment — are the leading causes of bankruptcy.
When you think about it, medical debts are the most unexpected of all bills. You may know if a job is going to be lost. You likely know if and when you’ll fall behind in mortgage payments.
But knowing if you or a family member will be diagnosed with cancer, if your child will have a sports injury, and that you will have lacking insurance to pay for it — that’s different. Of course, with the new health care programs in effect, this may be absolved.
But the simple fact is, in 2009 medical bills were the leading cause of bankruptcy filing. These unexpected bills did the most damage.
However, if you look closer at how the bills effected families, home owners, and workers, you’ll also see that the medical bills weren’t the cause; the inability to work drives people to bankruptcy.
That means if you have an expensive medical bill, even if you can pay it, the aftereffects of the injury are far worse. If you are no longer able to work your regular job because of a disease, injury, disability, or mental illness, you may be in economic trouble.
This all may sound scary. It’s not meant to do that, but it’s food for thought. It’s a warning, because in a separate study, an even higher number of those with medical conditions were forced to file bankruptcy, and more than 75% had health insurance of some kind.
What can you do to avoid this? What can you do if you file bankruptcy? There might be some government help in the health care problem. It’s clear the Health Care revolution is upon the United States. Whether you agree with the plan or not, problems like this are the clear result of some kind of change in the system.
If you have to file bankruptcy, no matter what, you should consider researching the subject as much as possible. Home owners, for example, have many options for saving assets from foreclosure. If you are overloaded with credit card debt and medical bills, Chapter 7 is the most effective way to clear major debt and often filers lose little if any assets.
