A serious illness could require an individual to take time off from work to recover or to help a spouse or child regain health. Most employers, however, do not provide compensation when an employee needs to take more days off than a company’s policy allows.
Families behind on their monthly expenses may find themselves overwhelmed by unexpected medical bills. As reported by CBS News’ MoneyWatch, 2.5 million individuals discovered health care providers sent their unpaid bills to collections. The collected data showed that between January 2020 and March 2021 Americans’ past-due medical debts totaled approximately $47 billion.
Credit cards and loans may not lead to better financial circumstances
Time spent not working may cause some Americans to turn to credit cards to pay their regular expenses. An increasing number of individuals have taken out personal loans to pay their medical bills. A website offering loans revealed its searches for personal loans to pay down medical debts surged by 50% within a year.
While a reduction in income may seem temporary, paying back a high-interest loan may last longer than anticipated. Debt incurred to pay medical bills may end up exceeding what an individual can afford to cover after returning to work.
A discharge may include a range of debt types
Myths about bankruptcy include the belief that an individual may file a petition to discharge only his or her medical debts. As noted by CreditKarma, an individual may not “pick and choose” which types of debt to list in a petition. The court may discharge all qualifying outstanding consumer debts, such as credit cards, personal loans and health care bills.
A bankruptcy filing requires listing all income, assets, debts and living expenses. The outcome may result in a discharge of a wide range of unmanageable and unsecured consumer debts including those incurred for medical care.