We have health insurance to cover our medical expenses, especially if we have a serious issue that requires surgery, treatment or an extended hospital stay.
The medical bills can quickly add up, putting some families at risk of financial ruin.
The strain of medical debt
Medical debt is a leading cause of personal bankruptcy in the United States. Even with good health insurance coverage, out-of-pocket expenses such as deductibles, co-pays and uncovered expenses can escalate exponentially. A short hospital stay, diagnostic testing or an emergency room visit can result in bills amounting to tens of thousands of dollars. And, if one partner can’t work due to illness or injury, the impact becomes even more significant as the family struggles to survive on one paycheck.
In addition to the financial strain, the stress of mounting medical debt can take a severe emotional toll. Constant worry about how to pay the mortgage, car loans, student loans and living expenses can lead to anxiety, depression and feeling hopeless. It’s not unusual to start falling behind on the essentials, which could result in housing instability and food insecurity.
Some states realize the need for system reforms, and lawmakers in Congress are pushing for legislation that would help relieve some of the financial burden caused by medical expenses.
However, until that occurs, people must know they have options. Declaring bankruptcy can help with crushing debt and provide families with a much-needed financial restart. There are two main types of personal bankruptcy: Chapter 7 and Chapter 13.
Chapter 7 requires your income to be below the state median, and some of your assets may be liquidated to pay off creditors. Chapter 13 allows you to restructure your payments so that you can repay the debt over three to five years.
It can be difficult to decide if bankruptcy is your best option. Therefore, it’s crucial to discuss your situation with someone who can guide you in making the right decision.