Medical bankruptcy filings persist despite increased access to health insurance
Medical bills reportedly contribute to the majority of personal bankruptcy filings.
Despite passage and implementation of the Patient Protection and Affordable Care Act (also known as “Obamacare”) – which was intended to provide everyone with access to affordable health insurance so they could enjoy the benefits of medical care – excessive costs of treatment have still led many Americans to file for bankruptcy to escape medical debt. Though the PPACA has indeed led to record low numbers of people without insurance across the country, out-of-pocket costs, high premiums, uncovered medications, out-of-network specialists, experimental treatments, denied claims and other related expenses are still proving unmanageable for many, particularly those with chronic or terminal illnesses.
The high cost of treatment can lead to desperation
For people living paycheck-to-paycheck, adding in unexpected medical expenses because of an accident, injury or illness can be the proverbial straw that broke the camel’s back. When the money you earn has already been accounted for, finding ways to add in hundreds or thousands of dollars worth of medical bills can be simply impossible.
This leads many to put medical bills on credit cards or seek out unscrupulous “payday” or title lenders to cover their debt, which, of course, only makes things worse in the end because the original debt now comes with huge interest charges. Payday loans, designed to be very short-term in nature, come with exorbitant interest rates and must often be “rolled over” until the debtor can afford to repay them. A one-time payday loan of only a few hundred dollars can end up dragging out for years and costing you thousands.
The original worry about medical debt is exacerbated by the fact that medical debt collectors are notorious for being some of the most aggressive and harassing in the industry. A NerdWallet report reveals that about 40 percent of all consumer debt in collections is medical-related, which is more than taxes, retail, telecom, utility and mortgage collections combined. Medical bills are often reported to collections faster than other types of debt and are a leading cause of complaints about inaccuracies on credit histories and of unfair debt collection practices. The fear of credit-related impact, in addition to a desire to escape the creditor harassment, only fuels the desperation.
A better way: bankruptcy
For some people dealing with medical debt, there are ways to manage. Working with providers on a payment plan, negotiating a lump sum settlement, borrowing low-interest funds from a loved one or dipping into savings can all be strategies to pay off medical expenses. For others, though, these options aren’t available or are insufficient. In that case, it may be worthwhile to explore greater debt relief through a bankruptcy filing.
A Chapter 7 or Chapter 13 bankruptcy will eliminate unsecured debt like credit cards and medical bills, allowing the filer to get a fresh financial start. It does have drawbacks, namely the long-lasting impact on the filer’s credit rating (bankruptcy will stay on a credit report for up to 10 years), but it is still the best option for many people.
To learn if bankruptcy is right for you, contact the attorneys at Meredith Law Firm, LLC at one of their three convenient South Carolina locations (the Columbia office can be reached at 803-753-7351, the North Charleston office at 843-410-3961, and the Myrtle Beach office at 843-353-3553).