Bankruptcy can happen for a lot of different reasons. For consumers, they often struggle with things like student loans, credit card debt, unexpected expenses and even home mortgage loans. A lot of times, each individual aspect of their debt seems sustainable – i.e., they can pay the mortgage or pay the credit cards – but the cumulative total is just too much to pay off.
But these things are certainly not the main reason for bankruptcy in the United States. What you’ll find is that most Americans go bankrupt because they have overwhelming medical debt. It is cited in the majority of bankruptcy cases as at least a compounding factor, if not the only factor.
For instance, someone could have a few thousand dollars on a credit card that they can pay off easily. But then they could get injured and have medical bills in the tens of thousands of dollars. If they declare bankruptcy, the credit card debt may be cited as a contributing factor, but it is also clearly not the reason that they had to take this action. Medical debt pushed them over the proverbial cliff.
Why is medical debt so serious?
One reason that medical debt can be so overwhelming is that some people do not have health insurance. In the U.S., health insurance is often tied to someone’s employment. If they’re unemployed, that could mean that they don’t have insurance and they don’t have enough of an income to buy their own insurance plan.
But it’s also true that a lot of people have debt that goes beyond what their insurance will cover. They may simply not be able to cover the total amount, or there may be other complications. For example, people sometimes get care that they think will be covered by insurance and then they find out that it was “out of network” after the fact. There’s no way to go back, so now they have more than they ever anticipated and they can’t pay it off.
If you’re facing this type of overwhelming debt, likely because of something that was completely out of your control, be sure you know how to use bankruptcy and the other legal options at your disposal.