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What would you do if you were saddled with high medical bill debt? Would you declare bankruptcy? With the rising cost of healthcare, it seems that high medical bills and bankruptcy are starting to go hand-in-hand.
About 20% of Americans cite medical bills as the reason behind their bankruptcy when they seek financial consulting, according to a recent study by CredAbility.
This is an increase from just a few years ago, when about 12-13% of Americans cited medical debt as the reason behind their bankruptcy, according to The New York Times.
Why? With the rough economy, more Americans have gone through periods of unemployment, leaving gaps in their medical insurance coverage.
Plus, Americans who purchase insurance themselves might opt for cheaper plans with lower premiums in an effort to save money.
Lower premiums, however, often mean that there are high deductibles, making consumers more vulnerable to incurring high costs before their insurance kicks in, The New York Times reports.
It also seems medical debt is simply the kind of debt that Americans feel obligated to pay off. Some might even turn to opening up a new credit card, according to The New York Times.
This, unfortunately, may only lead to more debt.
Is bankruptcy right for consumers who are weighed down by medical bill debts?
It could be, but consumers should do their due diligence and carefully research their options before considering bankruptcy. There are alternatives, such as debt management plans that allow credit card holders to pay off their debt over a set period, reports The New York Times.
And, consumers looking to erase their medical bill debt through bankruptcy will need to figure out which bankruptcy is right for them. Is it Chapter 7, which erases many debts but may liquidate a consumer's assets? Or Chapter 13? Consulting an attorney to discuss your medical bills and bankruptcy might be a prudent option, as bankruptcy law is complicated and can be difficult to navigate without some expert guidance.