Even those Michigan residents with excellent health benefits can still become lost in medical bills if serious or chronic illness strikes. Deductibles can be extremely high and co-pays can add up quickly. Thousands of dollars in medical expenses can build up in a short time. Excessive medical debt can force a person to make financial decisions that could lead to the situation getting worse, instead of better.
It is estimated that excessive medical debt was the cause of 62 percent of bankruptcies in 2007, for which many petitioning for bankruptcy owed over $5,000 in medical expenses. Some owed upward of $20,000. Many people mortgage their homes to cover the cost of medical expenses; however, this is often only a temporary solution. For those with chronic illness who are unable to work, there can appear to be no solution.
Most of those Michigan residents who petition for bankruptcy are normal, everyday people. Many are classified as median income homeowners who are well-educated with good jobs. The amount of debt consumers owe and their overall situation once a medical crisis has passed could determine what type of bankruptcy a person files.
Those with a significant amount of medical debt can consider whether bankruptcy is an option which could aid them in taking back control of their finances. Chapter 7 bankruptcy can completely eliminate the medical debt. Chapter 13 bankruptcy allows one to pay back very little or, in some cases, none of the overwhelming medical expenses. Understanding the options these forms of bankruptcy provide could allow one to stop the spiral into uncontrollable debt.
Source: valuewalk.com, “Medical Expenses Still Largest Cause Of Bankruptcy,” Kathy, July 1, 2013