There is an image that some people hold about people who declare bankruptcy, that they are irresponsible or can’t control their spending habits. However, according to CNBC, medical bills are a key factor in as much as two-thirds of all bankruptcies in the United States based on a recent research study. Unfortunately, this trend of “medical bankruptcy” is nothing new and, according to the study cited by CNBC, has been at roughly the same level for the past decade.
Bankruptcy refers to a collection of legal processes by which a person or business who has more debt than they can reasonably pay back has that debt discharged. For individuals, the two most relevant kinds of bankruptcy are known as Chapter 7 and Chapter 13 (referring to the sections of the bankruptcy law that govern the process). In Chapter 13, the person declaring bankruptcy submits a payment plan for Court approval to see if they can alter the terms of their debt to make it more manageable to pay off over time. In Chapter 7, the person declaring bankruptcy may have non-exempt property sold off to satisfy as many outstanding debts as possible before their debt can be discharged.
The reason medical bankruptcy is so common is simple: many people simply do not have adequate health insurance coverage. Despite the passage of the Affordable Care Act, which, as its name implies, was meant to lower the cost of healthcare and increase access to insurance, many people are left with health insurance that doesn’t cover all their costs or leaves them with a large deductible. This means that even people with insurance may get stuck with untenable medical bills, especially if those bills are a result of a disease or injury that leaves them unable to work. Chronic conditions or severe and unexpected emergencies can also lead to spiraling medical bills.
If you are experiencing financial distress, such as from mounting unpaid medical debt, contact an experienced New Jersey bankruptcy attorney to discuss your options. The Law Offices of Hunziker, Jones & Sweeney are experienced in helping families and individuals deal with the devastating effects of financial distress and in mapping out potential strategies, including the possibility of filing for bankruptcy, to help them cope and to see the light at the end of the tunnel. The attorneys at the firm understand that financial distress is an extremely emotional and difficult time for anyone to go through. If you are experiencing severe financial distress and may be considering bankruptcy as an option or want to learn more about what a bankruptcy filing may do to help you, call The Law Offices of Hunziker, Jones & Sweeney at (973) 256-0456 or fill out our contact form for a consultation.