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Bankruptcy May Be Your Option

78 percent of medical bankruptcy filers had insurance

Filing for bankruptcy, whether under Chapter 7 or Chapter 13, provides consumers with overwhelming debt a way out. Chapter 7 is known as the fresh start bankruptcy because a significant amount of debt can be discharged under this process. Chapter 13 is often referred to as the wage-earner bankruptcy, because it allows an individual to reorganize their debts into a manageable repayment plan based on their current income.

Regardless of which type of bankruptcy an individual may qualify for, medical debt is a driving force behind many of these filings. According to a recent study, this won't be changing anytime soon. In fact, researchers predict that the number of bankruptcies filed based on medical debt will increase above those filed primarily based on credit card or mortgage debt.

Health insurance is a hot-button topic in current events, and NerdWallet Health conducted the study mentioned above, completing it in 2013 amidst this debate. The study focused not only on medical debt, but also its relationship to health insurance. Researchers found that this relationship may not be as strong as some people think.

In fact, the data showed that in 78 percent of the medical bankruptcy filings that were analyzed, the debtor had health insurance. “How is this possible?” one might ask.

Looking specifically at the insurance policy, for many individuals, coverage doesn’t kick in until a high deductible has been met. Beyond that, there are expenses related to medical care that must be paid but are certainly not under any coverage plan. This includes the costs associated with traveling to a medical facility, paying for child care while undergoing treatment or wages that are lost during the treatment period.

For those that find themselves under the burden of debt, no matter the source, discussing their options with an Oklahoma bankruptcy attorney is the first step to finding a solution.

Source: Fox Business, “Medical Bankruptcies are Still a Problem, Here’s What to Expect,” Donna Fuscaldo, Feb. 18, 2014

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