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How medical debt can push New Jersey residents into bankruptcy

On Behalf of | May 21, 2024 | Credit Card Debt/Medical Bills

People are sometimes rather judgmental of others who experience financial hardship. Many people want to tell themselves that those who file for bankruptcy must be irresponsible individuals because they want to believe that they could never be in a situation where bankruptcy becomes necessary.

The unfortunate reality is that any adult in New Jersey could potentially acquire the relief provided by a bankruptcy filing. A variety of different scenarios, including job loss and divorce, might lead to someone needing to file for personal bankruptcy.

Medical debt is one of the most common reasons that people provide when asked why they filed for personal bankruptcy. Even those in good health and those with excellent insurance coverage might end up considering personal bankruptcy because of medical debt.

Medical debt can accrue for many reasons

Someone without insurance could end up with thousands of dollars in medical debt if they contract an illness or get hurt unexpectedly. Even those with decent medical coverage are vulnerable to medical debt when they require uncovered treatments or must go out of network for their care.

For example, someone hurt on vacation in the Midwest might require emergency care in another state. They could end up responsible for most or all of their treatment costs because their insurance policy doesn’t cover out-of-network care. People facing particularly severe medical issues may want cutting-edge or experimental treatments that insurance doesn’t cover. Many cancer patients, for example, can end up with significant debt because of their treatment.

Medical creditors are notoriously aggressive. While hospitals and healthcare providers theoretically have an interest in protecting their patients, they frequently undermine their health by causing incredible stress. Efforts to collect on medical bills might lead to lawsuits or liens against someone’s personal property.

An individual who can no longer fulfill payment arrangements made with a medical creditor or someone facing a creditor lawsuit may need to consider bankruptcy. An automatic stay puts a temporary end to collection efforts and could lead to the dismissal of a lawsuit. Unsecured medical debts are typically eligible for discharge in a bankruptcy filing if someone manages the process appropriately.

Although people may feel ashamed or frightened about the need to file for bankruptcy when facing medical debt, taking action is typically better than letting the situation worsen. Filing for bankruptcy can eliminate medical debt and protect someone from lawsuits that could further damage their finances.