This post is the first in a series about the most common causes of personal bankruptcy. The stereotype of a person who declares bankruptcy is generally not flattering. Often they are depicted as someone who spends without thinking, uses credit cards recklessly, and has absolutely no financial discipline. The truth be told though is most people find themselves facing a bankruptcy through circumstances over which they have no control. The five most common causes of personal bankruptcy are medical expenses, job loss, out-of-control spending, divorce, and unexpected disasters. Of all these reasons, medical expenses are the cause of most personal bankruptcies.
A Greater Percentage than Expected
According to a study published in the American Journal of Medicine, in 2007, medical bankruptcies accounted for 62.1% of all bankruptcies. This percentage of bankruptcies had increased 49.6% from 2001. Surprisingly, most of the people who declared bankruptcy due to medical expenses were not poor but well-educated homeowners with middle-class incomes. However, even with a middle-class income, these people had to declare bankruptcy because their illnesses caused significant income loss.
Three-quarters of people who declare medical bankruptcy have health insurance. Unfortunately, health insurance is usually insufficient when the medical bills start to pile up. For instance, if a person is covered by an 80/20 health insurance plan and their final medical bill is $100,000, they’re on the hook for $20,000. Most people are not able to absorb an unexpected $20,000 shortfall in their income, and if they lost wages during that period it gets even more disastrous.
Getting Legal Help
Illness can overwhelm you with stress. In addition, the financial strain that results from hospitalization can be unbearable. If you are in financial trouble from medical bills there is help available to you. Stephen Behm is a Minnesota bankruptcy attorney that will treat you with the respect you deserve and show you how a medical bankruptcy can provide you with the financial relief and protection you need.