Myths exist about bankruptcy, and many people assume that profligate, irresponsible spending causes crushing debt. A review of the facts paints a far different portrait of why many Illinois residents file for bankruptcy. Data reveals the primary cause for bankruptcy filings is medical debt, which should not be surprising. Medical bills for specific treatments could run into hundreds of thousands of dollars, a figure far beyond the patient’s means to pay.
Medical debt leads to a financial crisis
The National Consumer Law Center reveals that more than 50% of bankruptcy filers show medical debts as part of their obligations. The amount of debt may vary from filer to filer, and medical bills could be the primary volume of unpaid obligations for some.
Medical care might be expensive, and statistics showing nearly 20% of medical debts go into collection reveals people struggle to pay them. Purchasing a health insurance policy could help someone avoid paying massive debts, as the insurance coverage may address the costs. Not everyone has insurance, though. An insurance policy may deny a claim, too, leaving the patient with the bills.
Dealing with the debt
Setting up a payment plan with the hospital could help someone avoid consumer bankruptcy paths. Hospital administrators may understand someone’s financial situation prevents them from making full payment, and they could accept payments every month. Perhaps the hospital may even forgive some of the debt.
Patients should review their bills as well. Errors happen, including costly ones. Overcharging sometimes happens. Take that as another reason to review billings.
Insurance companies don’t always deny claims fairly. Suing the insurance company might lead to a judgment that covers some or all medical debts.