The Top Reason for Filing Chapter 13 Bankruptcy
If you were to randomly pick a few strangers for a poll and ask them the number one reason why people file chapter 13 bankruptcy, you would likely hear variations of two scenarios. Some people will say that extravagant living and too much debt caused most people to run to the bankruptcy courts for protection. Other people will say that a loss of a job led some people to use a Minneapolis bankruptcy lawyer to help them with their struggles. But these two scenarios are not at the top spot on the list. Medical bills are the biggest reason for bankruptcy filings.
Medical Costs Can Cause Bankruptcy
A study that was published in The American Journal of Medicine illustrates a huge increase in bankruptcies caused by medical reasons. The culprit can strike in a multiple of ways.
The most obvious problem is the high cost of medical procedures. Some tests and procedures are not sufficiently covered by private insurance. Co-pays, uncovered services or deductibles are not paid by insurance. The uncovered amount must be paid by the patient. People have charged money on credit cards, acquired small loans, and in some cases took out a mortgage on their home in order to pay medical costs.
Some people have lost time from work due to illness or medical procedures. Fighting a serious infection that requires multiple weeks off work can be a real financial hardship to many families. The prospect of having no income for a few weeks sends them into a tail spin. Some people are fortunate enough to retain their job after a lengthy absence but others are not so lucky. After losing their job, and insurance benefits, a lot of people find themselves in a hole that seems impossible to get out of.
Difference between consumer debt and medical costs
Unlike consumer debt, medical costs can escalate extremely quickly. An operation or medical testing can cost $10,000 or more for a procedure that lasted less than two hours. For individuals suffering with complex medical problems, a handful of tests and procedures can turn into several thousands of dollars in just a few weeks.
Many health organizations are flexible in working with patients. Hospitals, specialty clinics and surgeons will offer a monthly payment structure in order to help defray some of the costs. However, for people that are faced with multiple medical procedures over a short time, the payments can be as much as a mortgage payment.
A Minnesota Chapter 13 plan may be the only hope for many of these individuals. Putting the medical costs under the protection of the bankruptcy court can protect individuals from wage garnishment and possible loss of assets. Seeking the advice of a competent attorney is often sound advice for many individuals.
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