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Using Chapter 7 bankruptcy to eliminate medical debts

On Behalf of | Mar 18, 2020 | bankruptcy

Despite a booming economy, many Americans are facing economic struggles. Many of these people are currently in retirement or about to retire. In this demographic, medical debt is often the problem. Health insurance and health care become more expensive as people age. This coincides with a greater need for health care services.

CNBC reports that there are more than 137 million people in America struggling to pay medical bills that have pitched their finances into crisis. In fact, the number one reason people consider taking money out of retirement or filing for bankruptcy is to pay off medical bills.

High rates of medical bankruptcy

Many people are not only considering taking these actions. They have no choice but to follow through. One study cited by CNBC shared that medical bills were involved in 67% of personal bankruptcies.

The importance of shopping around

One doctor in the article shares that many Americans get tricked into believing they do not have many options when it comes to prices. The truth is they can shop around like they do for any other service. There can be wide variations in costs between hospitals and even insurance companies.

The role of Chapter 7 bankruptcy

When people have already paid these higher bills and can no longer keep up, shopping around might be great advice given too late. There are also some medical procedures that are expensive virtually anywhere. In this case, filing for bankruptcy might provide immediate relief.

While there are certainly benefits for filing, remember to plan for the drawbacks as well. Credit Karma reminds filers that they may lose some assets to cover the debt. The bankruptcy also leaves a credit score record for about 10 years. For some people, these are much better risks to face than drowning in debt for another decade or so.