In Wisconsin and across the nation, people’s finances are a growing challenge due to the current health and job situation. People are losing their jobs and along with it, they are losing their health insurance. If they or a family member becomes ill as many people currently are, it inevitably results in massive medical costs that are difficult if not outright impossible to pay. While many might not want to consider the prospect of filing for bankruptcy, it is a useful and legal strategy to get onto stronger financial ground by clearing debt. Depending on the type of bankruptcy a person files, it may be possible to retain certain properties.
Survey shows lack of insurance leads to medical debt, causing financial problems
A recent survey has shown the growing problem of a lack of medical coverage and the growing debt from medical care. The survey was conducted by the Commonwealth Fund. It found that 20% of working age people were lacking sufficient health insurance. Also, 33% were confronted with medical debt. These numbers were for the first six months of 2020. In its research, participants were asked about these issues as the world is dealing with an unexpected and ongoing health concern, stoking fear and financial turmoil.
Of the working adults they spoke to, 43% did not have healthcare coverage that the researchers categorized as stable. That generally means that some of the people did not have insurance at all, faced gaps in coverage or did not have enough insurance. There were more than 4,000 participants with 12.5% saying they did not have any form of insurance. Nearly 10% had a gap in coverage with income that did not let them get Medicaid but also kept them from getting subsidized coverage under the Affordable Care Act. More than 20% were underinsured with insufficient coverage based on their needs. This was a challenge before job loss and illness engulfed the nation. Among the most vulnerable were people of color, those who worked at a small business, low income people and those just entering adulthood.
Bankruptcy might be a viable option for medical debt and other expenses
With medical debt accrued at such a rapid rate and people not having health care, not earning enough to pay it or losing their jobs and coverage completely, understanding how to address medical expenses and other debt is essential. Job loss has led to people relying on credit cards. This is exponentially increasing those in financial trouble with or without medical debt.
People are frequently reluctant to consider bankruptcy for a variety of reasons. They might be under the impression that it is an indication of failing to adhere to their responsibilities. Others could be fearful that they will lose their home, a motor vehicle or be unable to get credit in the future. These are misplaced beliefs that can be assuaged by consulting with those experienced in the process.
Chapter 7 bankruptcy is a liquidation where unsecured debt is cleared in relatively short order. Medical debt falls into this category along with credit cards and utility bills. Those who do not own anything of value may benefit from a Chapter 7 to eliminate their debt. Chapter 13 is a repayment plan where the debtor will send a certain amount to a trustee each month and the trustee will pay the creditors. This could be a useful step for those who own a home and would like to retain it. When dealing with overwhelming debt from medical expenses, credit cards and more, bankruptcy may be a viable alternative. Consulting with legal professionals experienced with bankruptcy can provide information and advice in how to move forward.