Curious about the most common reason people seek bankruptcy? The team at The Semrad Law Firm provides the answer in the blog below, an answer that could be surprising to the masses.
If you ask a handful of people on the street what are the leading causes of most debt, it’s likely you’ll get more than one answer about credit cards and overspending. In reality, those are two explanations for why people go into debt, but they don’t even make it into the top five.
Robert J. Semrad, Senior Partner at DebtStoppers and one of Chicago’s leading bankruptcy attorneys says the most common reason might surprise you, “Medical bills. That’s really number one. It could be a tie with job loss, but medical bills have a real impact and they’re hitting families when they are the least prepared.”
Nearly 43 million Americans have medical debt on their credit reports, and a third of privately-insured individuals have received a surprise bill within the last two years. New laws proposed within the last year are designed to protect predatory and false information from damaging a person’s credit and preventing future harm, but often the bills come with other pressures that intensify the situation.
“Imagine one of the worst things that could happen to you or your family – a heart attack, cancer – these are the bills with thousands of dollars to comb through. These are the bills that hit families the hardest. People don’t come to my office because of a $40 copay; it’s because a parent is sick and out of work and the bills roll in.”
Semrad says the bills are usually unexpected and can contain errors. It’s important to look through each bill and work with the hospital or doctor’s office to confirm exactly how much you owe and why. “Making sure you’re paying the right amount is the first step. Don’t ignore the bills,” he explains.
A study done by Consumer Reports says nearly three-quarters of respondents were unsure if they had the right in their state to appeal to the state or an independent medical expert if their health plan refused coverage. And, a vast majority, 87 percent, did not know where to complain.
Second, read up or contact a DebtStoppers office about how to resolve the debt. Many states have laws that protect patients from predatory collections on medical bills. Make sure you know your rights. It’s possible you can set up a payment plan.
Third, talk with your insurance provider and broker to see if you qualify for Medicaid. Call your insurance provider and ask if your local facilities are in-network. Run through an emergency scenario and find any obstacles. For example, if you know you’re having a baby ask what happens if you deliver in an emergency, know which doctors are not on your plan in advance so you can be prepared at the moment to ask for assistance.
“The laws are getting better at protecting people from surprise bills, or for errors and omissions in the treatment process,” says Semrad. “But, knowing this could be an issue and spending some time trying to prepare can make a big difference down the road. It really can be as simple as calling your local hospital and asking for a list of the doctors and services that do not accept your medical plan.
“If you lose your job, ask yourself what would happen if you went to the emergency room, or developed a long-term illness and speak to your doctor about an effective plan – in advance. After the bills have come in, it’s harder to dig out from underneath the balance.”