There’s no one source of debt that is singlehandedly responsible for the majority of bankruptcy filings every year. Most filings include numerous types of debt. Someone who is filing bankruptcy because of overwhelming credit card debt, for example, may also have outstanding auto loans and student loans.
But you can look at the trends to see what types of issues show up on most bankruptcy filings. When you do that, you will find that perhaps the most common major contributor is medical debt. One study claimed it was involved in as many as 61.2% of bankruptcy cases. Medical debt is a serious problem that can impact anyone.
Common issues with medical debt
The problem with medical debt in the United States is that insurance doesn’t always cover all of the costs of healthcare, which is exceedingly expensive. People often have health insurance and still find themselves on the hook for more than they can afford to pay. When they have other debt as well, just meeting their deductible may be enough to put them in over their head.
For example, an individual may go get emergency treatment due to a sudden health crisis. They don’t have the time to carefully consider exactly which doctor they speak to. They believe that all the doctors are in their network at the hospital, but they accidentally get care from someone who is out of network, and the insurance company refuses to pay. They wouldn’t have wanted care from that out-of-network doctor, but they can’t go back and change it after the fact.
Another factor is simply that people are going to choose to get medical treatment when they know they need it. They wouldn’t take out other types of loans or take on other kinds of debt, like more car loans or credit card charges. But they will take on medical debt because they don’t see themselves as having a choice, even if they know that it is unaffordable. They’re always going to choose their health and understandably so.
Considering filing for bankruptcy
For these reasons, those who are considering bankruptcy need to know exactly what steps to take to create a better financial future. There are options, regardless of your situation, and you just need to know how to proceed.