It’s a well-known fact that medical expenses are eating up household budgets and causing families to sink deep into debt. In Michigan and throughout the country, the number one reason that people file a consumer bankruptcy these days is to get relief from medical debt. In a Chapter 7 bankruptcy, for example, 100 percent of all unsecured medical debt will be wiped out forever against the debtor or debtors.
Even people with insurance end up in high medical debt with an average of $17,749 in debt. Those without insurance have an average of $26,971 in medical debts. Additionally, the leading causes of medical debts are hospital costs. Furthermore, it’s predicted that 1.7 million of us will be forced into bankruptcy as a result of medical bills. Plus, another 11 million people will incur substantial balances on their credit cards to fight their medical debt.
The last statistic is even more ominous when it is realized that many people may be paying in the neighborhood of 20 percent interest on their medical debt. There are many suggestions, such as seeing counselors, applying for charity, negotiating with medical providers and using a debt settlement provider. All of these ideas for medical debt relief are ineffective to bring about a true resolution of the debt. In each proposal, the debtor will pay large amounts in an effort to knock down the balance or eliminate it.
None of the proposed remedies wipe out the total debt. Bankruptcy, however, wipes it out fast, efficiently and forever, if you qualify for it. Nowadays, people who want to file a Chapter 7 must first pass what is called a “means test” to qualify. Most consumers with middle class incomes will qualify under the test. If residing in Michigan or elsewhere, high medical debt may be best handled by resort to the federal government’s bankruptcy remedy.
Source: HIT Consultant, Understanding The Causes of High Medical Bills in the US (Infographic), Jasmine Pennic, Oct. 23, 2013