Money Sense Tips

According to a new study reported in CNN, more than 60% of all bankruptcies in the United States are due to medical reasons, with many of those people being health-insured middle class people of good education.

The findings of the study, released online Thursday in The American Journal of Medicine, potentially downplay the full scope of the issue since that data was gathered prior to the current economic crisis. In 2007, medical problems contributed to 62.1% of all bankruptcies. Between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by about 50%.

This findings have clearly illustrated that hospital bills made up the biggest single expense for nearly 50% of the medically-bankrupt families; with prescription drugs representing the greatest expense for 18.6 percent families.

According to the report, a number of conditions prompted a large number of middle-class, insured Americans into bankruptcy.

For 92% of the medically bankrupt, high medical bills instantly added to their bankruptcy. A lot families with regular coverage found themselves under-insured, responsible for thousands of dollars in out-of-pocket costs. Out-of-pocket medical costs averaged $17,943 for all medically bankrupt families: $26,971 for uninsured patients; $17,749 for people with private insurance at the outset; $14,633 for those with Medicaid; $12,021 for those with Medicare; as well as $6,545 for people with VA/military coverage. For patients who at first had private coverage however lost it, the family’s out-of-pocket expenses averaged $22,568.

The study may further emphasize the urgency behind policymakers’ attempts to overhaul the country’s health care system. Congress has started outlining what health care advocates hope will be comprehensive legislation that addresses the high cost of medicine as well as lessening access to quality health care, especially among the poor and uninsured.

[Source: CNN]

Sometimes people end up with more debt than they can handle. Often it is not due to irresponsibility, but to circumstances beyond one’s control. Job loss, unexpected medical expenses and other such situations can cause finances to take a sudden turn for the worse. When such things happen, bankruptcy can ease the financial burden.

Bankruptcy should only be used when all other alternatives have been exhausted. It remains on your credit record for ten years, making it difficult or impossible to obtain loans and other types of credit. But in some cases, it is a debtor’s only hope for relief. If you’re considering bankruptcy, it’s important to know which type is best for your situation.

Chapter 7

Chapter 7 is the most common type of bankruptcy for individuals. It requires the debtor to turn all non-exempt property over to a trustee. The trustee then liquidates the property, distributing the proceeds to creditors to lower the debt. The remainder of the debt is usually discharged, as long as it doesn’t fall into categories that are ineligible for discharge.

Those filing for Chapter 7 bankruptcy must pass a means test to show that they are unable to repay their debts. Generally, they must have a total income below the mean income for their family size in their state. Those who do not qualify for Chapter 7 usually qualify for Chapter 13.

Chapter 11

Most Chapter 11 bankruptcies are filed by businesses, but individuals are also eligible for this type of bankruptcy. This type of bankruptcy is costly and complicated, and is only appropriate for individuals under certain circumstances that involve large amounts of debt and assets.

In Chapter 11 bankruptcy, the business (if applicable) may continue to operate. A repayment plan must be written and approved by creditors and the bankruptcy court. A trustee is not appointed unless there has been some sort of wrongdoing by the filing party.

Chapter 13

Chapter 13 bankruptcy is the second most common type of bankruptcy filed by individuals. In order to qualify, debtors must have an adequate amount of disposable income and their debt must fall below limits set each year.

Instead of turning over assets and having the debt remaining after their liquidation discharged, the debtor proposes a repayment plan in which he will repay creditors over a period of three to five years. Creditors may object to the payment plan, but the bankruptcy court has the final say as to whether it is accepted. The debtor is allowed to keep his property, and he pays creditors a reduced amount.

Bankruptcy is not something to be taken likely, but sometimes it is necessary to help debtors get a fresh start. A bankruptcy attorney can help determine whether you should file, and if so which type of bankruptcy is appropriate for your situation.

Get This Book Today==> The Personal Bankruptcy Toolkit by Daniel Sitarz