Whether you live in San Jose, Redwood City or another California location, you can likely relate to a fluctuating economy that has an impact on your personal finances. Depending on the unique circumstances of your lifestyle, such as whether you're married, have children, are employed, etc., you may have already overcome some economic challenges. It doesn't take much for finances to get thrown off-track.
Student loan debt is increasingly driving people in California to file for bankruptcy. According to a study conducted by LendEDU, 32 percent of people who file for bankruptcy under Chapter 7 have student loan debt. Among those who file for Chapter 7 bankruptcy and carry student loan debt, that debt made up, on average, 49 percent of their total outstanding debt. LendEDU examined 1,083 bankruptcy cases in the study.
While there are a number of reasons why California residents can face financial trouble, one stands out as the leading cause of personal bankruptcy in the United States. Medical debt is the most common reason cited for bankruptcy filings. A full two-thirds of all cases are linked to medical bills, with costly mortgages and consumer spending coming in as the next most common problems. While some may expect that health insurance will free people from serious medical debt, many of the people facing costly bills are already insured.
Most of the people in California and around the country who file personal bankruptcies each year do so because of medical debt, and many of them found themselves overwhelmed by bills despite having health insurance. Common reasons for hospital and doctor bills not being covered include getting treatment from out-of-network providers and visiting a specialist without first getting a referral from an in-network physician. Health insurance companies usually have fierce cost-control measures in place, and they often look for ways to deny claims.