Bankruptcy carries serious social stigma. A lot of people associate bankruptcy with irresponsible behaviors. They might think that people who need bankruptcy overextended themselves on credit cards doing frivolous things like buying expensive coffee or overpriced designer clothing.
The reality of bankruptcy is far different from what people think. Most individuals who find themselves considering bankruptcy have done their best throughout their lives to be financially responsible. Unfortunately, all it takes is one severe illness or unexpected medical issue to leave people in a financial hole that they can’t dig themselves back out of no matter how hard they try.
Modern care has gotten better, but modern insurance is arguably worse
Illnesses and injuries that would have been fatal even a few decades ago now have treatments and therapies that work. Trained staff in modern hospitals can save someone after they suffer a traumatic brain injury during a car crash, develop a debilitating form of cancer or contract an infectious disease.
Unfortunately, that impressive standard of care also comes with a staggering price tag in many cases. Cutting-edge therapy can cost hundreds of thousands of dollars with no guarantee of long-term success. Many times, the most effective or aggressive treatments available don’t have coverage under standard medical insurance.
People can also get hurt or fall ill while traveling, meaning that their insurance is almost useless because the care they have to receive is out-of-network. The policies currently available for health insurance often include large patient responsibility costs, including coinsurance, deductibles and co-pays.
Medical debt is the leading cause of modern bankruptcy
Bankruptcy filings can resolve all unsecured debt listed by the person seeking a discharge, and many people will discharge all of the possible debt since they must seek bankruptcy anyway. However, about two-thirds of the people filing for bankruptcy in the United States will cite medical debt as the primary motivating factor for their decision to file.
Whether you needed care not covered by your insurance or simply had patient responsibilities that far exceeded what you could possibly pay, if medical debts have left you struggling financially and dealing with the stress of bill collection efforts, filing for bankruptcy might be a way to free yourself from the stress of collections and insurmountable financial obligations.
