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Why Do Americans File for Bankruptcy?

Posted on in Bankruptcy Attorney Illinois
Why Do Americans File for Bankruptcy?

The answer to this question can seem obvious at first. Americans file for bankruptcy because they have large debts that they cannot repay without help. For these individuals, Chapter 7 and Chapter 13 bankruptcy can offer some financial relief. You might be wondering what causes these filers to get into such debt in the first place. Is it our consumer culture? Stagnant wages? A lack of foresight?

Though these issues can and do put some Americans into difficult debt situations, none are the top cause of bankruptcy-inducing debt in this country. According to the Kaiser Family Foundation, the top reason why Americans go into debt that eventually pushes them to file for bankruptcy is medical expenses.

Medical Debt Statistics

The New York Times reports the following statistics about Americans and their medical debt:

  • 20% of insured Americans under the age of 65 faced difficulties paying their medical bills within the last year;
  • Within this group, 63% used all or most of their available savings to cover their medical expenses; and
  • 42% of the people in this group took on a second job to generate income to pay their medical bills.

Other statistics to consider include:

  • According to a gobankingrates.com survey, 69% of Americans have less than $1,000 in savings; and
  • 34% have no money saved in the bank at all.

Avoiding and Managing Medical Debt

Planning ahead can help you reduce your chance of being immobilized by medical bill debt. Of course, you cannot avoid accidents and illnesses in many cases, but you can make it a priority to put money into an emergency fund each month. If you do find yourself facing an unexpected medical or other expense, this money can help you avoid accruing debt or at least reduce the financial burden it places on you and your family.

Pay close attention to what your health insurance covers and what you can get with other plans available to you. It might be worthwhile to purchase a more expensive, more comprehensive healthcare insurance plan.

It is also important to remember that you can negotiate your medical bills. Take the time to go over your medical bills closely to determine if any errors occurred. If so, report these errors to your insurance provider to have them corrected. Ask if you qualify for any discounts on your healthcare services and understand what is covered and what you are expected to cover before you receive treatment.

Work with an Experienced Buffalo Grove Bankruptcy Lawyer

If you are facing debt that you feel you cannot repay on your own, consider working with an experienced bankruptcy lawyer to file a bankruptcy claim. Contact our team at Newland & Newland, LLP today to schedule your initial consultation in our office, during which we can examine your case closely to help you make a productive decision about managing your debt. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Jimi Filipovski)

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