Medical Bankruptcy
When most of us imagine people who file bankruptcy, we almost always conjure up images of individuals and families that were irresponsible in handling their finances.
The reality is that while often this is the case, this is not true for the majority of bankruptcies.
An estimated 62% of all bankruptcy filings in 2009 were triggered by excessive medical bills.
It appears that more people are filing medical bankruptcies as in 2001, only 42% of all bankruptcies were due to medical expenses.
What is a Medical Bankruptcy? Technically, there is no such thing as a medical bankruptcy.
A bankruptcy is a bankruptcy regardless of the cause.
The term medical bankruptcy is really just a basic term that has been adopted to categorize any bankruptcy that was caused by excessive medical expenses.
It includes bankruptcies filed due to direct medical expenses or those due to mortgages taken out to pay for medical expenses.
It also includes any bankruptcy filed due to an interruption in income due to medical reasons.
Why Bankruptcy? An estimated 78% of those who file for bankruptcy protection have insurance.
Despite this, they owe an average of $17,943 in medical expenses.
Those who did not have insurance coverage owe only slightly more - an average of $26,971.
You may wonder why they do not simply make payment arrangements so that they can pay back what they owe over time.
The answer lays in the aggressive nature of the medical collection industry.
Rather than accepting payments over time, most medical collection agencies are more interested in quickly pursuing litigation.
They very often file lawsuits over ridiculously small amounts - sometimes as little as a few hundred dollars.
If you have a lot of medical bills, chances are they are not all owed to one place but rather spread out over multiple health care providers.
Thus, it is not only possible but highly probable that you will be sued by multiple creditors.
Since most of the people who file for a medical bankruptcy are actually home owners who are educated, they are not used to dealing with lawsuits due to not being able to pay their bills.
It is easy to see how they could become easily overwhelmed by their situation and see bankruptcy as their only option.
Because medical bills are unsecured debts, in the absence of significant assets, the creditors end up empty handed.
It would seem that the aggressive way that these collection accounts are being handled may actually work against the creditors.
The reality is that while often this is the case, this is not true for the majority of bankruptcies.
An estimated 62% of all bankruptcy filings in 2009 were triggered by excessive medical bills.
It appears that more people are filing medical bankruptcies as in 2001, only 42% of all bankruptcies were due to medical expenses.
What is a Medical Bankruptcy? Technically, there is no such thing as a medical bankruptcy.
A bankruptcy is a bankruptcy regardless of the cause.
The term medical bankruptcy is really just a basic term that has been adopted to categorize any bankruptcy that was caused by excessive medical expenses.
It includes bankruptcies filed due to direct medical expenses or those due to mortgages taken out to pay for medical expenses.
It also includes any bankruptcy filed due to an interruption in income due to medical reasons.
Why Bankruptcy? An estimated 78% of those who file for bankruptcy protection have insurance.
Despite this, they owe an average of $17,943 in medical expenses.
Those who did not have insurance coverage owe only slightly more - an average of $26,971.
You may wonder why they do not simply make payment arrangements so that they can pay back what they owe over time.
The answer lays in the aggressive nature of the medical collection industry.
Rather than accepting payments over time, most medical collection agencies are more interested in quickly pursuing litigation.
They very often file lawsuits over ridiculously small amounts - sometimes as little as a few hundred dollars.
If you have a lot of medical bills, chances are they are not all owed to one place but rather spread out over multiple health care providers.
Thus, it is not only possible but highly probable that you will be sued by multiple creditors.
Since most of the people who file for a medical bankruptcy are actually home owners who are educated, they are not used to dealing with lawsuits due to not being able to pay their bills.
It is easy to see how they could become easily overwhelmed by their situation and see bankruptcy as their only option.
Because medical bills are unsecured debts, in the absence of significant assets, the creditors end up empty handed.
It would seem that the aggressive way that these collection accounts are being handled may actually work against the creditors.
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