Bankruptcies and medical bills

[chuckbrown 0]

You don't have to be destitute to file bankruptcy. In fact, bankruptcy law is designed to allow you to file for bankruptcy before you're in the poor house, and will permit you to shield lots of assets from creditors. The $11,000 in medical bills everyone is citing is probably in addition to all the normal bills that we associate with being middle class (credit cards), and the respondents to the survey may not have wanted to admit that credit cards pushed them over the edge. Personally, my experience with bankruptcy clients is it's almost always credit card debt that causes a consumer bankruptcy filing. It's very easy for middle class people to have negative net worth (debts exceed assets) in which case you're a prime candidate for bankruptcy relief. And you don't have to be out of work to file.

The mechanics of bankruptcy law are much different from the moral aspect of walking away from your bills, but that's exactly what the law allows. We've come a long way from debtor's prisons.

[Nightingale 0]

well, there's also the situation that credit card companies, since the debt is unsecured, are far more willing to work with their borrowers to assist them in repayment, through credit counseling companies who lower interest rates, or sometimes they will flat out settle for a lesser amount (although there are other problems that go along with the settlement solution).

Banks can be less likely to work with the borrower, since they can simply foreclose and force payment or sale to get their money back. They have less of an incentive to work with the borrower during financial difficulties because the debt is secured.

[Gravitymaster 0]

You may very well be correct. My point is the article attemps to put the blame for all these bankruptcies on medical costs and insinuates this is the reason for filing. If you reread my first post, I said I found it hard to believe anyone middle class would file bankruptcy over $11,800 in medical bills. I also said something doesn't seem right about the article. I still stand by my original statement.

[chuckbrown 0]

Obviously, it was a very flawed study. People said medical bills forced bankruptcy. I'm sure that's what they reported, whether it's accurate is another thing. Also, the report doesn't disclose the total amount of debt & instead just looks at the medical bills. It's the total amount of debt that matters.

[chuckbrown 0]

If you ever get this situation, tell your clients to file for bankruptcy. Your clients may have problems with feeling like they're deadbeats, but show them the money impact and they'll come around. Your clients will never save anywhere near the money by using a credit counselling agency than by filing for bankruptcy and the effect on credit is the same. Either way, their credit is trashed (and probably already was).

Credit counseling? Your clients pay money but not as much as they were paying before, but more than if you or they negotiated the settlement. Bankruptcy? Your clients walk away from unsecured debt without paying a cent.

Don't rag on me, I didn't write the law.

[RoadRash 0]

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Obviously, it was a very flawed study. People said medical bills forced bankruptcy.

Exactly...we are surmising a lot in terms of our responses...however I agree with Gravitymaster that what they define in the article as middle class and what most people define as middle class are two different animals...(if you read my earlier post...I stated long before anyone posted a definition)...There is a VERY large income bracket that encompasses middle class...and then again...there is the "upper middle class"...Though some would belive them to be rich...

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I'm sure that's what they reported, whether it's accurate is another thing. Also, the report doesn't disclose the total amount of debt & instead just looks at the medical bills. It's the total amount of debt that matters.

Right!! The amount of credit card debt, mortgage, car note...yadda, yadda, yadda...either way...if an "illness" is preventing someone from working then it will be impossible to pay back any of it...and medical bills are just a cherry on top...

~R+R...

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Fly the friendly skies...^_^...})ii({...^_~...

[slug 1]

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Obviously, it was a very flawed study. People said medical bills forced bankruptcy. I'm sure that's what they reported, whether it's accurate is another thing. Also, the report doesn't disclose the total amount of debt & instead just looks at the medical bills. It's the total amount of debt that matters.

The study was conducted by a special interest group that had a agenda, so they only reported the fact that would support their conclusions and remedy.


"The study, published in the journal Health Affairs, estimated that medical bankruptcies affect about 2 million Americans every year, if both debtors and their dependents, including about 700,000 children, are counted.

"Our study is frightening. Unless you're Bill Gates you're just one serious illness away from bankruptcy," said Dr. David Himmelstein, an associate professor of medicine at Harvard Medical School who led the study.

"Covering the uninsured isn't enough. We must also upgrade and guarantee continuous coverage for those who have insurance," Woolhandler said in a statement.

She said many employers and politicians were pressing for what she called "stripped-down plans so riddled with co-payments, deductibles and exclusions that serious illness leads straight to bankruptcy."

100% health insurance isn't going to help a debtor who is to ill to work and can't continue paying their monthy debt.

A lot of people have death insurance, sick leave and vacation time, but how many "middle class" people have disability insurance? Which may get you by for a year or two.

The financial advisors recommend that people have a 3 month emerency fund. For someone with a serious medical issue 3 month's won't be enough.

R.I.P.

[peregrinerose 0]

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Your calculation of mortgage payment was based on an interest rate of approximately 5% and a 30 year loan. Many first-time homebuyers, especially those under the age of 30 are not going to qualify for a rate that good.

I bought my house when I was 26. I pay $650/month mortgage. House cost $82500, I put basically nothing down on it, had about 4.5% interest.

Do or do not, there is no try -Yoda

[Nightingale 0]

How long ago was that? If I could find a house for that amount around here that was in good condition and not in a bad neighborhood, I'd certainly buy it. However, it'd be really difficult to find a condo around here for that amount, and a house? no way. I've seen condos near my parents' place sell for several hundred thousand.

I didn't say "no one under 30" would qualify for a good interest rate, just that many won't. Interest rates are also very dependant on other factors of the economy, sometimes it's easier to get a lower rate, sometimes it's a lot more difficult.

[peregrinerose 0]

I bought my house 3 years ago. Keep an eye out for the foreclosures, that's how I got mine. Every other house in the neighborhood was $130+. This was ugly as hell, but nothing structurally wrong with it, just needed to be cleaned up. Big corner lot, 3 bedrooms, finished basement, 2 bathrooms, central air, etc. Nice area (Elizabethtown, PA). Talk to a real estate agent and have them look for foreclosures/bank sale homes for you. It took a couple months to find this one, but I'm glad I did.

Jen

Do or do not, there is no try -Yoda

[Gravitymaster 0]

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Your calculation of mortgage payment was based on an interest rate of approximately 5% and a 30 year loan. Many first-time homebuyers, especially those under the age of 30 are not going to qualify for a rate that good.

I bought my house when I was 26. I pay $650/month mortgage. House cost $82500, I put basically nothing down on it, had about 4.5% interest.

Yep, age has nothing to do with qualifying for a loan or what interest rate you get. Credit score, job stability, debt to income and D.P. do.