Medical Bills, Job Loss Among Top Reason for Bankruptcy in US
Approximately 1.7 million people will file for bankruptcy protection this year, and about 56 million adults will struggle with health care-related bills in 2014.
There has been a significant increase in Americans being unable to pay off their debts over the past 20 years — and Congress has responded by making it more difficult to qualify for bankruptcy. Yet bankruptcy may occur due to financial issues that are often out of the filers’ control and stem from challenges that are inevitable and unexpected.
Health care and unpaid medical bills are the cause for 62 percent of bankruptcy filings — making it the number one cause of bankruptcy in the United States. Nearly two million people are affected annually. Yet 78 percent of those driven to bankruptcy due to medical costs have some sort of health insurance — meaning that these extreme costs can affect anyone. Injuries or disease are usually unanticipated and can quickly dissipate savings, retirement accounts and home equities. Once these funds have been exhausted, bankruptcy may be the only available option.
Another common issue is an unexpected termination or layoff, which leaves individuals without the income on which they depend. Not having an emergency fund to draw from makes the situation even worse, often leading to the use of credit cards and further debts. With job loss also comes a loss of insurance coverage, resulting in medical expenses paid out of pocket.
A loss of property or belongings due to an unexpected event can be damaging to funds. Yet if the owner is not insured for the property, bankruptcy may soon follow. A house destroyed by an earthquake is not covered by insurance unless separate coverage had been taken out for this type of natural disaster. Those who experience property loss due to an extreme incident also lose most of their possessions.
In many cases, bankruptcy may be a result of events beyond our control. For more information on Chapter 7 or Chapter 13 bankruptcy and to explore your options, consult an experienced bankruptcy attorney in Los Angeles.