The evidence is building that more and more often, medical bills are pushing people into bankruptcy. An article by the Examiner evaluates a study of recent bankruptcy cases, finding that “75% of the entire pool surveyed had some type of health insurance.” Even so, medical bills listed in the bankruptcy case start around $5000 and rise above that. Most expenses are a result of out of pocket medical costs that insurance did not cover. To make matters worse, most of the insurance companies cancel coverage when the employee suffers a disabling illness because they become too sick to work, leaving them with medical bills and no insurance.

One example discussed in an article in Forbes discusses how a woman who is facing skyrocketing medical bills and credit card debt is considering bankruptcy just to get down to an income level low enough to qualify for disability insurance. The most upsetting part is that her situation is not unique. Overwhelming medical bills causes 17-62% of all bankruptcy declarations. She, like most, doesn’t want to file for bankruptcy but it is her safety net.

Many people associate words like failure, embarrassment, loss, and rock bottom with bankruptcy. However, the truth is, it is none of those things. Bankruptcy allows individuals to both eliminate and reorganize most of their debt. Additionally, most of your assets are protected. Before you go to an extreme like selling, transferring or cashing any of your assets it is imperative that you consult with a bankruptcy attorney.

Should I See an Attorney?

People are finding themselves “underinsured” and trying everything they can to get back on top. From running up credit cards just to pay the medical bills, to maxing them out and falling further into debt, it is no surprise that bankruptcy is lurking just around the corner. What most people don’t realize is that the moment you find yourself with debt concerns, the best choice is to consult with an attorney. An attorney will be able to help you determine if there are other options besides bankruptcy that could get you out of debt.

  • Credit counseling
  • Payment plans
  • Obtaining loan extensions
  • Modifications

Those are some of the many alternatives to bankruptcy that people don’t realize exist. However, when you know you are in trouble, or you receive medical bills that you know are going to pose financial problems, that is when it is essential to talk with an attorney. Attorneys can put your finances into perspective and either point you in the right direction and get you set up with a bankruptcy alternative or if necessary help you file.

There are several different types of bankruptcy: Chapter 7, Chapter 11, and Chapter 13 are the most common. Chapter 7 bankruptcy is the most common filed by individuals. With the rising costs of medical care and the increase of individuals struggling to stay on top, filing for bankruptcy may help relieve some of that debt. After consulting an attorney you will be able to get a better idea of what disclosures are required, and what debts will be discharged. Typically, chapter 7 bankruptcies are resolved within six months unless it is a complicated case.

If you are feeling overwhelmed with medical bills and struggling with finances, your best bet is to contact an attorney. Attorneys will help you understand a realistic view of your circumstances, while also relieving some of the stress that is associated with debt and bankruptcy.