Some California residents may be a single medical emergency away from filing for bankruptcy. This is the takeaway from a study conducted by a professor at CUNY Hunter College in New York and several others. The study looked at 910 random bankruptcy filings between 2013 and 2016. Of those bankruptcy filings, 58.5 percent were related to medical expenses. Those who get sick may be vulnerable to losing their jobs, which may cut off access to an employer-based health plan.
The study was deemed to be one of the first of its kind to analyze the impact of medical bills after the passage of the Affordable Care Act in 2010. Prior to its passage, 65.5 percent of debtors said that medical expenses contributed to their bankruptcies. That number was 67.5 percent three years after it passed.
According to the co-author of the study, bankruptcy can provide a way to put an end to financial pain and suffering. However, a long-term solution would be to reform the modern health care system. Doing so could truly help people who are just one accident away from financial ruin.
Individuals who are struggling to pay medical or other types of debt may benefit from filing for Chapter 7 bankruptcy. This could generate an automatic stay from creditors. It may also allow a person to have a debt discharged without paying the entire balance owed. In a liquidation bankruptcy, assets are liquidated with the money raised used to pay off creditors. An attorney may further explain the details of a liquidation bankruptcy and if an individual may qualify to file for it.