Nowadays you hear many people say, ‘I am broke!” People find themselves scraping for money during these hard economic times. There are also people who are jobless because the company they worked for closed down. This is the sad reality of life now. Being jobless is not the end of one’s woe; there are also illness and calamities to worry about. Alas, we have no way of knowing when we are going to be sick. When we get sick it is also costly. We try to have medical insurance or health plans in case major illnesses will strike us. Sometimes these are not enough and we incur medical debts. If the medical debts are substantial enough then a person may suffer bankruptcy medical bills.

What is Bankruptcy?

In the dictionary term, bankruptcy means utter failure or impoverishment. It seemed simple and easy to understand. In a business point of view bankruptcy is when a person or organization cannot pay the debts owed to creditors. If you are thinking about it is simply someone who is broke and cannot pay his financial obligations. The reason a debtor is filing bankruptcy is to get relief from debt.

What are the types of Bankruptcy?

There are six important types of bankruptcy. They are all used in different situations. The types of bankruptcy are divided into chapters. The most common types of bankruptcy are Chapter 7 and Chapter 13. As stated in the Bankruptcy Code at Title 11 of the United States Code; Chapter 7 involves basic liquidation of an individual or business asset. It is also known as straight bankruptcy. It is the quickest and most easily understandable version of bankruptcy that is available. The Chapter 13 bankruptcy is a rehabilitation bankruptcy that comes with a payment plan for those that have a regular source of revenue or know someone whot is willing to pay the creditors in installments while a person’s finances is being restored.

What is Medical Debt?

Medical debt is a debt you incurred because you became sick. It can be because you fell ill, had a major accident or needs a major operation. It is different from other debts because it is accidental and unforeseen. A medical debt is unsecured so there is no collateral available which a creditor can repossess.

What is a Medical Bankruptcy?

In a wider scope, medical bankruptcy can be understood as a legal protection availed against debts from medical treatment, hospitalization, medication costs and other medical expenses arising from an illness. Some of the reasons for medical bankruptcy can be increase of hospital and medical insurance cost, availing of health insurance without any job, and lack of children’s health insurance.

Bankruptcy Medical Bills Statistics

According to the American Journal of Medicine, 62 percent of all bankruptcies filed in 2007 were linked to medical expenses. Fifty-five percent of all new bankruptcy or 1,100,000 people are likely to file bankruptcy every year. Bankruptcy medical bills are a big struggle among many people right now. It is a serious concern and it still has no clear solution in sight.