Chapter 7 Bankruptcy & Healthcare Costs
Filing bankruptcy, for many Americans, is perceived as an indication of financial failure and bad decision making. Unfortunately, statistics show the opposite is true. In fact, bankruptcy most often is the result of a family’s financial demise attributed to sudden and unexpected health care costs. With the recent change in bankruptcy laws, many American families are turning to bankruptcy as a viable alternative to restoring credit worthiness and moving forward in gaining financial stability.
Chapter 7 bankruptcy is the most common type of bankruptcy proceeding filed. Allowing for liquidation of all assets, a trustee is appointed to collect, sell and distribute funds to the various creditors. Under Chapter 7 bankruptcy, creditors, including medical providers, are no longer permitted to collect monies directly from the debtor. Instead, medical providers are required to place the open and delinquent medical expense account on hold until the bankruptcy is discharged.
Under the new bankruptcy laws, debtors are now required to undergo credit counseling, debt management and complete budgeting courses before bankruptcy is approved. For many bankruptcy filers, unfortunately, these programs may not be suitable as the basis for the significant debt, most oftentimes, was not attributed to poor money management. Instead, the bankruptcy is the result of a growing healthcare crisis in this country leaving many Americans with significant medical expenses which are, often, unpaid. In addition to those with significantly high medical bills, there is an additional sector of American families with mild to moderate health expenses which, in turn, result in an inability to pay other debts, thereby resulting in a bankruptcy filing due to significant loan and credit card debt. In most studies, this loan and credit card debt is directly the result of medical services which required payment. So, what is the solution?
For many Americans, negotiating credit for medical services, purchasing high deductible health plans, investing in a Health Care Savings Account and even diving into retirement and investment portfolios are the only feasible options to controlling the health care expenses. Bankruptcy can be filed every six years and, with health care costs continually rising, many Americans may turn to bankruptcy court as an insurer of last resort. For those with terminal illness, the implication of filing bankruptcy several times may result in denial of medical care by healthcare providers.
Now this is a serious flaw in the system as people afflicted with ailments can no longer have healthcare facilities and filing for bankruptcy is virtually out of the question without dire consequences in the bargain because if the disease is fatal, you know what the outcome will be. Therefore, the San Diego Bankruptcy and Student Loan lawyer has to look into this matter as this is a double blow for debtors.
In the United States, millions of American families report an inability to pay necessary healthcare costs. With no limit placed on the cost of medical services, American families are placed in a situation where filing bankruptcy, ever six years, seems the only viable option for maintaining some financial stability. For those seeking to avoid bankruptcy, consider purchasing high deductible catastrophic insurance with a Health Care Savings Plan in an effort to cover some of the significant medical costs. When unable to afford coverage, contact a credit counseling organization for additional recommendations and services.
