Medical Bills Drive Chapter 7 Bankruptcy

Medical expenses have been an increasing problem in the United States since the Eisenhower administration, and while the presence of the concern has been constant over that time, the severity of the problem is increasing.

In fact, the growth of medical expenses has accelerated to the point that by 2003, medical costs composed more than 15 percent of the United States Gross Domestic Product (GDP).

As many people can attest, costs have continued to rise in the past decade.

At the current rate, we can expect medical expenses to make up a full third of our GDP by the year 2040. No wonder our lawmakers can all agree that there is much work to be done on the issue of healthcare.

Filing Chapter 7 bankruptcy Could be One Medical Emergency Away

Many individuals who have experienced an illness or injury end up exercising their option to declare Chapter 7 bankruptcy as a way to eliminate the medical expenses that they can’t pay.

As recently as 1987, a comparative study found that more than 9 million families were spending more than a fifth of their income on medical costs.

Many middle-class Americans feel protected from these growing costs by their employer-based health insurance, but when serious medical problems develop, the protection of an insurance policy all too often proves full of holes.

As insurance is employment-sponsored, it can disappear when illness or injury prohibit working. COBRA laws exist to allow an employee to extend the insurance coverage by assuming payments, that is not an effective solution for everyone.

COBRA coverage is limited in duration, and an illness or injury that prevents work in the long-term will eventually outlast the protection.

Even during the period when COBRA coverage is available, it may be too expensive for an individual who is now unemployed and faced with ever-growing premiums.

Even for those with active medical insurance coverage, co-payments, non-covered services and other out-of-pocket expenses could lead to an overwhelming bill.

Some policies include “catastrophic” provisions that limit out-of-pocket costs, the failsafes are often so high that policyholders are bankrupted on the way the cutoff amount.

Chapter 7 Medical Bankruptcy Stats

In 2000, one study showed that an estimated 326,000 personal bankruptcy petitions in 1999 were triggered by illness or injury expenses.

More than a quarter of a million additional filers had substantial medical bills.

By 2003, medical problems had already become the second-most common factor in bankruptcy and data suggested that medical concerns may be the basis for as many as 50 percent of all consumer bankruptcy filings.

The combination of lost wages, medical bills, and lack of insurance or weak points in insurance coverage all combine into the most significant threat to the financial welfare of American families, in addition to the physical and emotional pain that such episodes can bring.

Unlike the stereotypical deadbeats so often portrayed by the credit industry and their advocates, many Chapter 7 bankruptcy petitioners have done everything possible to make payments, including taking out loans or second and even third mortgages on their homes to stay out of bankruptcy.

Weighed Down By Medical Bills?

If you are in this unfortunate position, find out what advantages a bankruptcy filing can offer you by contacting a Chapter 7 bankruptcy lawyer.

Far from making a commitment, just talking to a lawyer about your options can make a big difference in how you decide to recover financially.