Americans file personal bankruptcy for many reasons. However, a new study shows that medical bills play a big role in personal bankruptcy filings.
The study reported that medical bills are the number one cause of personal bankruptcy in the U.S., with roughly two million filing for bankruptcy each year due to unpaid medical bills, according to a study by NerdWallet Health.
The study predicted that 1.7 million people in the U.S. will file for personal bankruptcy this year due to medical debt and struggling to make ends meet. Researchers said that many people struggle with medical debt and health-care expenses, even if they have health insurance coverage.
Medical bills can spiral into a huge financial mess for many people, regardless of whether they have health insurance or not. Because many health insurance plans have high deductibles and out-of-pocket expenses, many Americans simply cannot afford to pay all of their medical bills.
This leads to some taking out additional credit cards and racking up credit card debt to help pay for other daily living expenses, in addition to trying to pay back their medical bills. In addition to having more credit card debt, some people deplete all of their savings trying to pay their medical bills and other expenses.
While not everyone with high amounts of medical debt will file for Chapter 7 bankruptcy, it is usually a last option for those who choose to file for bankruptcy. Filing for personal bankruptcy can help people who are struggling to make ends meet and feel like there is no way to change their financial situation. Individuals who are considering bankruptcy should consult a bankruptcy attorney first to discuss their specific situation.
Source: CNBC, "Medical Bills Are the Biggest Cause of US Bankruptcies: Study," Dan Mangan, June 25, 2013