Health care costs in America continue to trend upward and insurance costs follow suit. The Affordable Care Act made health care more accessible to more people, but costs are still high. In fact, even with government assistance, many people cannot afford adequate health care. Because of this, Minnesotans may still end up with medical bills out of their reach.
CNBC reports that of all bankruptcy proceedings, medical bills contribute to 66.5% of filings. In fact, every year, medical bills cause around 530,000 families to file for bankruptcy.
Understanding medical bankruptcy
When finances spiral out of control during a health crisis, families often consider filing for medical bankruptcy. Credit Karma reminds readers that no legal term exists by that name. It only describes a reason people file for bankruptcy. Subsequently, individuals still need to choose Chapter 7 or Chapter 13 bankruptcy and follow the established processes for these.
Acknowledging the impact
Sometimes, bankruptcy really is the only suitable option someone can choose. It may allow the individual to erase debt and start over. Bankruptcy may also allow better debt restructuring, which may reduce payments. Even so, consequences exist. For example, the individual’s credit score may take a serious hit. This ding may last for up to 10 years. Depending on the bankruptcy route chosen, the person may also lose a significant portion of existing assets to repay the debt.
Lawmakers across the country have taken several steps toward expanding Obamacare to improve coverage availability and quality. Minnesota is one such state. However, it will take more than this to help protect residents from the potential need to file for medical bankruptcy.