Bankruptcy at a Glance
A complicated legal procedure, bankruptcy is a method of wiping your debt. It is a valuable option for some who find themselves consumed by compounding debt stemming from numerous sources, although not without serious consequences. You can say goodbye to your credit rating if you file bankruptcy and the counseling courses and financial coaching to wipe your debt are just the beginning. Whether or not you are thinking about filing for Chapter 7 or Chapter 13 bankruptcy, this article will scratch the surface as to the top reason individuals choose this method of escaping debt.
Top Reason for Filing Bankruptcy in 2013
There a many reasons individuals file bankruptcy, although statistically it has be shown that roughly 33 percent of debtors were in situations in which they had lost their job and therefore their income. In turn, these debtor’s bills steadily rose until they were consumed to a point in which climbing out was not an option. Other high percentages of bankruptcy y filings stem from unexpected disasters such as devastating natural disasters, divorce and a lack of restrained spending. Although, the highest number of bankruptcy filings in 2013 stemmed from medical related bills.
In 2013, nearly 2 million people were affected by compounding unpaid medical bills, forcing them to obliterate their credit by filing for bankruptcy. Another study has shown that maintaining health insurance doesn’t really protect you from the debt health bills can bring. It is staggering really, the widespread affect medical related debt has on so many people.
For example, it is estimated that roughly 1.7 million people will choose to file for protection from their debt through bankruptcy filings according to NerdWallet. Medical bills do not only push people into bankruptcy, but force pressures on more than just a portion of our nations population. More than 20 percent of our nation’s population that is between 19 and 64, approximately 56 million, battled finance crippling medical bills in 2013 (NerdWallet.com). Even more common in 2013 were the 10 million adults accumulated medical bills that they were unable to pay off the same year (NerdWallet).
Why Medical Bills are Forcing Many to Neutralize Their Debt through Filing Bankruptcy?
The balance between high-deductible health insurance plans and the out-of-pocket expenses have yet to reach a reasonable medium and many households struggle with these high deductible costs. The average American household is working off of $50,000, and when maximum deductibles hit a ceiling of between $5,000-$10,000, medical expenses can quickly complicate life’s remaining financial responsibilities.
According to a Harvard University study in 2013, as many as 75% of these filers had insurance, though under-insured most likely, yet they still felt the best course of action was to pursue bankruptcy. Health insurance will cover a large chunk of your medical bills in the event of an unfortunate health happening, although the co-pay in most cases may leave many household’s life savings at risk.
This raises question as to where medical expenses will stop as they climb higher towards what seems like an infinite ceiling. Statistics as those in this article raise question as to what the better option is regarding health insurance. To overpay on outrageous premiums to safeguard yourself from medical debt in the future or to scrimp now by being under-insured or even play every day like a poker game and forge health insurance altogether.
The evidence from the 2013 statistics would suggest the latter two options could essentially the same choice. Either way, bankruptcy is no demon to toil with, and as the health insurance debate continues to become more divided, who knows if a solution to avoiding catastrophic medical expenses will be sought out in time to save millions from ruining their credit for a lifetime.
David Holly is a freelance writer with diverse interests and a keen attention to detail. He highly recommends the services of attorney Scott D. Owens for anyone who is considering filing for bankruptcy.