Forced Into Bankruptcy
Should you lose your job, you also run the risk of losing your medical insurance. Should you later be injured and unable to work, you can find yourself filing for medical bankruptcy.
COBRA Premiums – Unaffordable For Most Low-to-Middle Income Families
The enactment of COBRA has afforded employees the choice of continuing their previous employer’s health coverage by personally assuming the payment obligations for the premiums. However, the “choice” is rarely viable since being rendered unemployed often translates into being unable to financially afford to pay the medical premiums. Under these circumstances and depending on how much you have in savings, all it takes is one bad accident or disabling injury and you can find yourself facing bankruptcy.
From Injury to Financial Hardship
For the unemployed in money trouble, suffering a disabling injury or illness without the benefit of having medical insurance, filing for bankruptcy protection can be the only viable option.
Bankruptcy protection puts an end to being chased by creditors and is intended to offer the debtor a fresh financial start. But what happens after the bankruptcy case is over? After the unemployment benefits run out? What happens when you run out of money and there are no immediate prospects for employment?
Sooner or later you might have to vacate your home or apartment and relocate someplace else. If you don’t have close friends or family that can help you through the crisis, you may need to consider staying at a temporary homeless shelter.
The Risk of Homelessness
According to a study conducted by Physicians for a National Health Program (PNHP), unpaid medical bills have been linked to the filing of at least 62% of all personal bankruptcies.
In addition, most medically bankrupt people were in the middle class before having fallen into financial hardship and over 60% of bankrupt people had attended college and owned their own homes.
Many factors put people and families at risk of homelessness. Economic conditions such as unemployment, low wages, expensive housing, and the lack of health and/or disability insurance are common factors that can lead a person to be rendered homeless.
Given the extent of this growing crisis, it is ironic that the United States, the wealthiest nation on the planet, is also the only developed country still without universal health care. Without universal healthcare over fifty-million Americans remain without medical insurance and at risk.
The Bankruptcy Option
While there can be a number of factors leading to the risk of homelessness nothing can be as devastating as the combination of living through a financial hardship while also suffering a disabling injury or accident. Being forced into bankruptcy under these circumstances is why people are terming the option as a medical bankruptcy.
The two main types of bankruptcies fall under Chapter 7 and Chapter 13 of the United States Bankruptcy Code. If you file under Chapter 7, upon discharge you eliminate almost all unsecured debt such as medical and hospital bills, credit cards, utility bills and unsecured personal loans. There are certain debts however that cannot be legally discharged. The major non-dischargeable debts include the collection of back taxes incurred less than three years before the date of the bankruptcy filing, most student loans, and child support obligations.
A Chapter 13 can give you up to five years to pay back your debts, usually without additional interest. There is really no tangible legal or financial benefit to choosing this form of bankruptcy and some experts believe Chapter 13 runs contrary to the public policy of affording the debtor a fresh start. This is especially true if you remain unemployed and in financial difficulty.
Public Resources And Homeless Assistance
For more information on locating local homeless shelters, low-income-no-income public and transitional housing, food banks and pantries, information on food stamp assistance, legal aid and financial assistance, visit the GotTrouble Financial Hardship Food and Shelter Resource and Directory.