Why Do People File For Bankruptcy in Arizona?
With severe instability throughout the economy, many people are wondering if it’s the right time to file for bankruptcy. However, the most common reason that Americans file for bankruptcy is relatively surprising. Surely in recent months, many people have racked up tens of thousands in credit card debt, taking cash advances, and might be spiraling in the vortex of payroll advances. But outright, that isn’t the overbearing issue that comes up when filing for bankruptcy, especially in Arizona.
The Affordable Care Act Offered No Improvement
The most common reason that Americans file is medical debt. Medical debt is exceptionally overwhelming, difficult to get out of, and almost impossible to pay off. How we got to a point where medical networks can charge tens of thousands of dollars for unnecessary testing is incomprehensible. But when many people received these medical bills, even surprise ones, it’s hard to negotiate because you hopefully received adequate treatment.
When exploring how medical debt is so prevalent, many people cite that it shouldn’t be a problem anymore because of the Affordable Care Act. The American Journal of Public Health cited in a recent study that despite the ACA, there has been no change in the percentage of bankruptcies that site medical causes.
This observation sheds light on one of the most significant issues in the perception of medical debt and bankruptcy? The idea is that if you have insurance through the Affordable Care Act, then there shouldn’t be the opportunity to get into this overwhelming debt. But health insurance is not enough to keep individuals or families out of debt.
Health Insurance Just Isn’t Enough.
In 2005 about 46% of all bankruptcies sided medical conditions and medical debt. But the medical debt in these bankruptcy filings was most often expenses that weren’t covered by insurance, overwhelming co-pays, and lost work because of the illness or condition.
More people have health insurance now, but many families choose the cheapest option and usually have the highest co-pays. So when a medical emergency does come up, they may experience tens of thousands in sudden medical debt. Additionally, health insurance does nothing to help the household recuperate from lost income.
How Does Medical Debt Factor Into a Bankruptcy Filing?
Filing for bankruptcy in Arizona can include your medical expenses, and it can either help get rid of them or at least make them more manageable. Through Chapter 7 bankruptcy, you can remove your medical expenses altogether. This type of bankruptcy offers a discharge or essentially erases all of that unsecured debt. With chapter 13, it’s more likely that she’ll have a repayment plan that might spread that medical debt over three or five years.
Talk to a local Arizona bankruptcy attorney to learn which type of filling is best for you with the amount and type of medical debt you have. There’s also the possibility that your medical condition will continue to build that debt back up, and you may need to have a plan in place so that medical that doesn’t become overwhelming again. Talking with an Arizona bankruptcy attorney is always the first stop when you’re considering wiping the slate clean.