Loss of income is the most common reason for filing for bankruptcy, according to a study that found it was cited by nearly 78% of respondents. This shouldn't be surprising, since most of us rely on income from a job to pay our bills. Kimberly Amadeo is an expert in the US and global economies and investment, with more than 20 years of experience in economic analysis and business strategy. She is the president of the economic website World Money Watch and a writer for The Balance, providing information on the state of the current economy, as well as on past events that have had a lasting impact.
Medical bills are reportedly the number one cause of bankruptcy in the US, with a study stating that 62.1% of bankruptcies were due to medical problems. Another study found that more than two million people are adversely affected by their medical expenses. It's hard to know what the real impact of medical expenses is with so many different interpretations of the study results. What is known is that there are many people who are so affected by health care debts that they need to file for bankruptcy.
Estimates have been different in the past due to the timing of the studies that were conducted, the different methods, the way in which the results were interpreted, and the reasons why the results were used. Turning is a concept that consists of using information in a way that benefits the presenter or the parties associated with the presenter. The information presented in studies such as those mentioned above can be manipulated in such a way that the information, although not good, seems much worse. Researchers disagree on evidence that medical bills cause bankruptcies. The biggest problem in answering this question is that those who file for bankruptcy are not required to state the reason. As a result, the estimates are based on surveys.
Therefore, the answer will depend on how researchers formulate their questions and how the respondents define the cause of their bankruptcy. A variety of factors cause bankruptcies. Many people with medical debts also have other debts. They may also have lower incomes, few savings, or have lost a job.
Medical debts are generally unexpected: Many Americans live paycheck to paycheck because of the cost of living, low salaries, or living beyond their means. A sudden medical bill wreaks havoc on the financial lives of struggling people. Nearly a third of those surveyed by the KFF stated that they did not know that a particular hospital or service was not part of their plan. One in four found that their insurance had denied their claims. There are a lot of reasons why people file for bankruptcy.
Medical expenses do have an effect on people's financial situation, causing some financially responsible individuals to file for bankruptcy. For others, spending is the last push to overcome the financial cliff they were going through. The debate about medical expenses causing bankruptcies will continue to occupy a place on political platforms, around dinner tables and in academic circles in the near future. Politicians will continue to roll out numbers to get votes they need. However, what is undeniable is that a large number of people are influenced by medical expenses to file for bankruptcy in the United States. Medical debt will remain on your credit report as long as it's correct and the account is open.
Once it's closed, you can expect negative information to disappear from your credit report within seven years. If you file for bankruptcy, it can stay on your credit report for 10 years. NerdWallet Health finds that medical bankruptcies account for most personal bankruptcies. Peterson-KFF Health System Tracker states that medical debt is a major cause of consumer bankruptcy.
The Consumer Financial Protection Office reports how long negative information stays on your credit report: Equifax, Experian and TransUnion back US consumers with changes in medical collection debt declarations. Divorce can also lead to financial problems due to increased expenses and divided incomes when households are split up. If either party or both parties can't pay their debts, it can be very difficult to control expenses that arise from splitting two incomes. Our Chicago bankruptcy lawyer can determine if filing an application is right for you.
