Are Medical Bills One Reason for Filing Bankruptcy?

Who do you think files for bankruptcy? Why do you think people are filing for bankruptcy? These questions may seem easy to answer on the surface, however if we look more closely we can see that there is not one reason why someone files for bankruptcy. Let’s take a look at an average family who is living within their means and doing “everything right.” They certainly would not be someone that would need protection from the bankruptcy laws right?

First of all we would expect them to have health insurance. With health insurance their medical bill are covered right? That would depend on the type of plan that they have and what kind of medical issue they are facing. What is their deductible? What is the co-pay percentage? With most plans the co-pay percentage is 80 – 20. This means that insurance pay 80% of the bill after the deductible is meant and the family pays 20%. That works well for office visits and minor out patient surgeries. However if you are unfortunate to have a major health issue your 20% of a $100,000.00 bill would be $20,000.00. This would be in addition to the deductible. Now can this family who usually saves for a modest vacation now afford this kind of bill? What if the person with the major health issue can no longer work? That is when it may become necessary to see a bankruptcy attorney. Studies have found that 62% of all bankruptcies involved medical bills and illness related problems. Of the 62% of the filers, 78% had medical insurance. Of these people most were well educated middle class families. Some studies show that most families are one major health issue away from filing bankruptcy.

With the fact that many families are one major health issue away from bankruptcy anyone can find themselves in this situation. Another issue that comes into play is that most health care facilities have their own collection agencies or services. Your huge health care bill is treated like a past due credit card payment or a missed mortgage payment. They use same tactics as other creditors when it comes to collecting on a debt. They call and harass the person. They file court action may include garnishment. Once garnishment starts then you may find yourself falling behind on your mortgage, car loans and even having problems buying gas or groceries. This is the time to look at bankruptcy and see if it can help you. With bankruptcy law being complex you need a good bankruptcy attorney to help you sort through your options. Do not let the stereotype of who files bankruptcy keep you from getting the protection you deserve when illness and medical bills threaten your financial future.