Given the financial troubles that many people in Michigan are experiencing, filing for bankruptcy is often a method they will use to try to obtain debt relief. While some have financial difficulties due to losing a job or mistakenly overspending, one of the most common reasons for bankruptcy is the accumulation of medical expenses when there is an injury or illness.
In 2013, up to 2 million people were forced to file for bankruptcy because of medical costs, according to research performed by NerdWallet. This surpasses the number of people who were forced to file for bankruptcy because of mounting debt from mortgages and credit cards. Even those who have health insurance coverage are not shielded from having to file for bankruptcy. Those who don't choose to file for bankruptcy continue struggling with debt due to medical expenses. People between the ages of 19 and 64 make up a significant number of those who face this problem.
Hospital bills can mount quickly for even the most minor of ailments. The study also indicated that 10 million people who had health coverage also will have medical expenses that they will be unable to pay. Although the Affordable Care Act was enacted to help people better afford insurance coverage, the study shows that having coverage doesn't stop people from being faced with a mountain of medical debt. A stark reality thus faces many Michigan residents: one out of every five bankruptcy filings is because of medical expenses.
Unfortunately, a cycle often forms in these instances as many decide to use credit cards to pay for their medical expenses and then they not only have high medical bills, but credit card bills as well. In the event that people are unable to keep up with their credit card bills, they will be confronted with high interest rates, penalties and potentially a reduced credit rating. The depletion of an individual's savings and rising bills can also lead those who need medication to stop paying for them to save money, leading to the possibility of even more medical costs due to incomplete treatment. When there is a concern about debt relief, prior to taking drastic steps to make matters worse, it is a wise decision to contact an experienced legal professional to discuss other options.
Source: NerdWallet Health, "NerdWallet Health finds Medical Bankruptcy accoutns for majority of personal bankruptcies," March 25, 2014