Unexpected life changes can affect any individual’s finances. In Nassau County, New York, local residents are aware of the fact that a single trip to the hospital can be costly. Medical expenses and other related costs are a nationwide problem. According to the Centers for Disease Control and Prevention, 26.8 percent, or over one-fourth of American families had experienced the effects of medical expenses to their finances.
The study shows that in 2012, 16.5 percent of families had dealt with medical expenses which caused financial difficulties. Nine percent of families were not able to pay off the medical expenses and one-fifth of the surveyed families stated that they are still paying the medical expenses through split payments.
One factor that affects the ability of families to pay the medical expenses is the lack of health insurance. Still, those who have insurance policies also find it difficult to settle their medical expenses. The challenge in paying the medical expenses is how to split the family’s income for the payments and the remaining money for their needs.
Dealing with medical debts is tough. They can lose the equity of their home just to pay the medical expenses. Fortunately, there is a way that can help them deal with medical expenses — filing for bankruptcy.
For individuals facing medical debts, they can choose between Chapter 7, liquidation bankruptcy, and Chapter 13, also known as reorganization bankruptcy. Under Chapter 7 bankruptcy, some assets will be liquidated to pay off the debts. Chapter 13 allows a debtor to pay off the debts through a repayment plan that lasts from three to five years. Remaining debts are forgiven once the bankruptcy protection has ended.
Source: CBS News, “More than one-fourth of American families faced financial burden due to medical costs,” Michelle Castillo, Jan. 29, 2014