Many Tennessee residents have seen their incomes shrink and their health expenses grow. Job loss or a reduction in hours can have a huge impact on the ability to pay anything but essentials like utilities, mortgage/rent and car payments. Medical bills, credit card expenditures and student loan payments may fall by the wayside as people struggle to stay afloat.
Medical debt continues to rise, as evidenced by a study performed by the Centers for Medicare and Medicaid Services. The agency found that America’s health spending is expected to increase to the annual cost of $6.2 trillion by 2028. Contrast this with $3.6 trillion from 2018.
How does medical debt relate to bankruptcy?
If you happen to be inundated with medical bills right now because of an unexpected illness or injury, you are not alone. Medical debt accounts for nearly half of all accounts in collections, and it is a leading cause of bankruptcy filings.
Studies are inconclusive on exactly how many people are filing for bankruptcy to discharge medical debt, though. Estimates range from 26 percent of bankruptcies all the way to 62 percent being caused by out of control medical expenses, depending on the source.
Many people determinedly continue paying medical bills by putting the payment on a credit card. For most, though, this only exacerbates the situation. They’re now paying high interest rates as well as the underlying healthcare expense, racking up even more debt.
Debt relief is out there
A better solution for many is to file for bankruptcy instead of falling further and further behind. Bankruptcy can get rid of debt like:
- Medical bills
- Credit card debt
- Unsecured personal loans
Bankruptcies also come with an often unexpected benefit. Immediately upon filing, collection actions like foreclosure and repossession, as well as constant phone calls and threatening letters from creditors, will all cease.
Though everyone’s financial situation is unique, it’s possible to keep key assets like a home, vehicle, and personal belongings and still achieve freedom from debt. Bankruptcy doesn’t have to be a bad thing. The reality is that a bankruptcy filing, either Chapter 7 or Chapter 13, offers a fresh financial start.