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.
There are many factors that can contribute to costly medical debt. Expensive prescription drugs can be one serious concern, especially if the costs are not covered by insurance. In addition, people should do extensive research to understand their medical insurance policies, especially if they will require care for a serious condition. Being clear about policies on referrals and locating in-network doctors or even hospitals can save thousands of dollars and help people to avoid claim denials from their insurance companies.
In other cases, medical debt is at the root of a problem that has grown. People may not know how to pay off an expensive medical bill, so they may charge it to their credit cards. This leads to high interest rates and potential defaults if they are then unable to keep up with the payments. In many cases, health care providers will negotiate a payment plan with patients if they know that insurance companies will not cover the bill. This is not an option once the bills become credit card debt.
People who are facing insurmountable medical bills may be uncertain about their options. A bankruptcy lawyer can provide advice and guidance on whether Chapter 7 or Chapter 13 could provide relief.