Overwhelming Medical Debt May Lead to Bankruptcy

The average family of four will have experienced medical costs of around $31,000 in 2023. Because of this, one in every three Americans are dealing with some form of Medical Debt. Further, an average of 51% of adults said they are concerned with being able to afford the cost of healthcare. Even 43% of those insured by their employer are concerned about being able to make their copays. This situation is causing many Americans to skip visits to the doctor out of fear of further medical debt. Luckily, Skipping visits may not be your only option in reducing your medical debt. Bankruptcy can help you discharge your medical debt.

Why Turn to Bankruptcy?

It may seem like a large leap to file bankruptcy, but there are many benefits for someone dealing with medical debt. It can be easy to ignore your medical debt when you are dealing with the rising costs of everyday life – that is until the debt collectors begin to call. When you file for bankruptcy, it puts in place an automatic stay, which prevents them from reaching out to you. Another reason is that if you are receiving collections, chances are they are already negatively reporting on your credit. Although bankruptcy doesn’t fix your credit score immediately, it can have a positive effect in the long run because it stops the debt that reflects negatively on your credit score.

How Does It Work?

If you decide you are interested in filing for bankruptcy, your fist move should be to find an attorney. Here at The Law Offices of Dax J. Miller, we offer Chapter 7 and Chapter 13 bankruptcies. The next step will be an initial consultation, we offer those for free! The initial consultation will be a way for the attorney to narrow down which bankruptcy is best for you and determine your attorney fees. After the initial consultation, the law office will collect documents such as your collection letters, taxes, and paystubs. With these documents we will hold a filing appointment to go over all the information in your case and draft up the documents that will be filed with the court. What happens after that is dependent on the type of bankruptcy you file.

Let Bankruptcy Save You From Medical Debt!

If you are struggling with the burden of medical debt and are considering bankruptcy, call The Law Offices of Dax J. Miller today! We can help you figure out your next move with a free phone consultation.

Bankruptcy Filings Returning to Normal

During the pandemic, bankruptcy filings dropped, mainly due to economic relief programs granted during the shutdown. Now that the economy is improving and bankruptcy filings are “returning to normal”, additional struggles from the pandemic are appearing.

As the federal aid ended, households and businesses alike began to feel the financial strain of the pandemic hit. Bankruptcy filings have since increased in the post-pandemic years, trending upwards each month in 2023. Households are feeling the effects of the economy trying to stabilize after the shutdown, between higher interest rates, inflation, and businesses closing affecting the job market. Though pandemic relief helped keep many households afloat, the absence of these programs has caused distress in both businesses and consumers.

Effects on Businesses

Businesses such as Bed Bath and Beyond, Party City, Rite Aid, and others are closing their doors, all taking to bankruptcy as the economy still attempts to stabilize after the pandemic. While businesses received some relief during the pandemic, it seems in the absence of these programs businesses are struggling to return to pre-pandemic status. With many larger businesses closing, it raises concerns about the employment rates.

Post-pandemic unemployment rates have been on a downward trend in recent months, however with the uptick in filings it seems many Americans may be looking for work again. Major corporations have struggled since resuming work after the pandemic, from issues in shipping supplies to strikes forcing businesses to lay off workers or shut down, creating additional hardships for consumers who are now struggling without a steady income.

Effects on consumers

Many consumers took out credit cards or other personal loans to help during the pandemic. With deferment periods now ending, it seems many consumers are faced with an unsurmountable amount of debt. Household debt owed coupled with the high cost of goods and services with inflation has financially hindered many consumers. The Federal Reserve has raised interest rates 11 times since last year. This has caused lenders to tighten their purses and forced consumers to agree to unmanageable interest rates, plunging them further into debt.

This effect can be seen when comparing pre-pandemic filings to more current years. In 2019 there were 777,940 filings across all chapters for the year. In 2020, filings dropped 30%. Filings continued a downward trend in both 2021 and 2022. However, in 2023 filings were up 17% in the first half of the year alone. This number is anticipated to continue to rise throughout the end of the year as the number of consumers struggle to regain financial freedom in a post-pandemic world.  Bankruptcy filings returning to normal is only the start of the economy’s return to to the status quo.

If you are reading this article and find that it speaks to your financial situation, contact us today.