Roughly 530,000 families throughout Virginia and the rest of the U.S. file for bankruptcy each year. The majority of those cases involve debt incurred due to medical reasons, according to a study published recently in the American Journal of Public Health. After reviewing bankruptcy data, a team of academics discovered that 66.5% of Chapter 7 and Chapter 13 petitions are filed by individuals who either have medical bills that they cannot pay or suffered a financial setback after an illness or injury left them unable to work.
One of the main goals lawmakers had when they passed the Affordable Care Act was to reduce the number of bankruptcies filed because of soaring health care costs. However, that does not seem to have happened. The researchers discovered that the number of people who cited medical bills or health care issues as the primary reason for their bankruptcy filings actually increased from 65.5% before the landmark law was passed to 67.5% in the years since.
The research also reveals that most of these bankruptcies are filed by individuals who had health insurance that did not provide adequate coverage. One of the study’s co-authors observed that most of the health insurance coverage offered by employers or available at affordable prices does not really offer much help when medical problems are serious and bills are high.
Many individuals who are struggling financially due to overwhelming medical debt are reluctant to take action because of the many myths surrounding personal bankruptcy that banks and credit card companies are eager to propagate. Attorneys with experience in Chapter 7 bankruptcy cases could dispel these myths and explain to clients how legislators drafted the nation’s bankruptcy laws to offer Americans the possibility of a fresh start. Filing a personal bankruptcy petition could put an immediate stop to collection efforts, lawsuits and daily harassment from bill collectors.