Bankruptcy is a legal tool that helps those with debt reduce their financial obligations. A successful personal bankruptcy filing will result in both an automatic stay to prevent most collection activity and a discharge of someone’s remaining unsecured debts if the filing is successful.
Many people still assign a value judgment to bankruptcy proceedings and assume that those who file for bankruptcy must be irresponsible. People often imagine those who spend thousands of dollars on credit cards as the types of people who file for personal bankruptcy.
One of the most common reasons that people file for personal bankruptcy is in no way a reflection of their personal behavior or poor financial management but instead is often the consequence of an unfortunate situation.
Medical debt pushes many people into bankruptcy
Maybe it was an unexpected infection or a motorcycle collision. You didn’t expect to need emergency medical care, but now you have massive bills. A major injury or illness like cancer can require hundreds of thousands of dollars in medical care.
Especially if you don’t have health insurance, you could find yourself facing insurmountable debts after you need emergency medical treatment or specialized cancer care. Although hospitals will work with people who require payment plans, they will also sell their debts to third-party collection companies and even sue individual patients who fall behind on payments.
Eventually, your medical creditors may try to take you to court to place a lien against your property or otherwise force you to pay them back. Filing for personal bankruptcy when facing such aggressive collection efforts can protect you. If your filing is successful, the discharge of your medical debts will give you a fresh start. Otherwise, the financial stress caused by that collection activity could damage your health even after you recover from the issue that necessitated your expensive medical care.
Bankruptcy can help you regain control over your finances
You shouldn’t have to choose between paying your medical bills and buying groceries, nor should you have to put off retiring for years because of an injury or illness in your 60s.
Pursuing a personal bankruptcy can potentially lead to the end of your major medical debt.