Smart Quiz: What is the Leading Cause of Bankruptcy in the US?
a. Medical Debt
b. Fraud and Scams
c. Home Foreclosure
d. Outliving savings
Answer: Medical Debt
Bankruptcy filings are usually thought to be caused by irresponsible spending habits and poor life choices. In many cases they are, but in reality, the #1 reason people file for bankruptcy in the United States is medical debt. Sadly, impossible to pay medical debt isn’t just an issue for the uninsured.
Even those with Medicare, or independent or employer-sponsored health plans, may still struggle with the costs associated with medical care. High copays, uncovered medications, catastrophic health events and medical issues requiring long term care can leave most people unable to pay the bills.
Seniors in particular are more likely than ever to file bankruptcy. The Consumer Bankruptcy Project found that older Americans have seen an increase in bankruptcy filings anywhere from 200 to 300 percent, since 1991. Increased healthcare costs, a lack of proper retirement savings, decreased availability of pensions in favor of 401(k) plans, delayed Social Security benefits, and too much debt are all contributing factors.
Despite having bankruptcy as an option, many seniors are unable to get back on their feet even after they file. They may no longer have creditors breathing down their necks, but they may still be left struggling to find ways to pay for basic housing, food, and medical care from their Social Security Benefits and with what little may be left in their retirement funds.
How You Can Protect Yourself
It is important to know that a retirement fund can be protected. Individuals should not take any sort of early withdraw, no matter what their age, to deal with medical debt or loans from other creditors.
Those who are already drawing from Social Security and who have few assets may also be considered judgment-proof and not need to file for bankruptcy at all. If you or someone you care for is considering filing bankruptcy, contact a local bankruptcy attorney for a consultation and additional information about specific circumstances.
~Here’s to Your Financial Health!