If exorbitant unpaid medical expenses have you seriously considering bankruptcy, you are not alone. CNBC reports that approximately 530,000 American families file bankruptcy every year because of medical debt.
The top six reasons people give for filing bankruptcy consist of the following:
- Medical debt – 66.5%
- Unaffordable mortgages or foreclosure brought about by a drop in income – 45%
- Living beyond their means – 44.4%
- Financially helping friends or relatives – 28.4%
- Student loans – 25.4%
- Divorce or separation – 24.4%
Medical debt
The Affordable Care Act, better known as Obamacare, went into effect in March 2010. Its primary goals included the following:
- To give more people affordable health insurance
- To expand the Medicaid program
- To support innovative medical care delivery methods
Despite its lofty goals, however, the ACA failed to resolve America’s health care crisis. Nor did it change the proportion of bankruptcies filed because of medical debt. In fact, in the three years following its implementation, such bankruptcies actually increased slightly, from 65.5% to 67.5%.
Decreased savings
Your lack of savings likely contributed to your current situation. Only about 40% of Americans have savings sufficient to cover even a $1,000 emergency, medical or otherwise.
Loss of income
Finally, this year’s pandemic likely only exacerbated your already precarious financial situation. You may well be one of the millions who lost their jobs in 2020 or had their hours severely cut. Consequently, you may have had to rely on credit cards to pay your utility bills and buy food for your family.
Whatever your reasons for considering bankruptcy, you should not view it as a failing on your part that puts a black mark on your character. Instead, bankruptcy represents a perfectly legal way to get out of debt and give yourself a new financial start.
