More than half a million people file for bankruptcy each year in Ohio and around the country because they have medical bills they cannot afford to pay or encountered financial difficulties after an illness or injury prevented them from working. That was just one of the discoveries academics made when they studied personal bankruptcies filed between 2016 and 2019. Researchers also noticed that about two-thirds of the Chapter 7 and Chapter 13 bankruptcy filings in the United States are linked to medical issues and debt.
Inadequate insurance
The study, which was published in 2019 in the American Journal of Public Health, also reveals that many of the Americans who seek debt relief because of medical debt had health insurance coverage when they were injured or got sick. However, they quickly learned that the affordable policies they purchased or the coverage they received from their employers did not pay all of the costs of the treatment they needed.
The Affordable Care Act
When lawmakers passed the Affordable Care Act in 2010, one of their primary goals was reducing the number of medical debt-related bankruptcies. The results of the 2019 study suggest that the landmark law has been a failure in this regard as the percentage of the Chapter 7 and Chapter 13 petitions linked to health issues has actually risen in recent years. The problem is that most Americans do not earn enough to put money aside to cover unexpected bills like health care costs. When a personal finance website surveyed consumers about their savings, only four in 10 of the respondents said that they could pay an unforeseen $1,000 expense without using credit cards or borrowing from family members of friends.
Bankruptcy myths and automatic stays
If you are struggling with a financial situation that is likely to get worse rather than better, an attorney with experience in this area could explain how filing for bankruptcy could give you an opportunity to make a fresh start. An attorney could also dispel the myths surrounding bankruptcy and mention that the automatic stay that is issued when a Chapter 7 or Chapter 13 petition is filed orders creditors to cease their collection efforts and stops debt-related wage garnishments and litigation.
