Medical bills a major cause of personal bankruptcy

Subjects such as experiences in the wheat harvest in Oklahoma and Kansas and the celebration we are having this week are rather fun subjects. Talking about personal bankruptcy is not so much fun, but such things also occur.

Personal bankruptcy could happen for any one of us. If it has been avoided, then it could be that the chips simply fell in the right places.

We have known people who opted for bankruptcy and they seem to come out of it without any problems and keep a high style of living. It may not look like it affected these individuals at all. Many of them appeared to get themselves so far in debt that they filed bankruptcy on purpose. At least one person has received a loan, made by the lender in good faith, only to declare bankruptcy the next day or very soon afterwards.

Many have used credit cards to receive the maximum amount of credit with the idea of taking bankruptcy. However, others have misused credit cards to the extent that it becomes impossible to pay them off and have no choice but to take bankruptcy. These people did not cut up their credit cards soon enough.

Granted, credit card companies have made it easy for people to get credit cards and often encourage them to use the cards. Once the maximum is reached, the maximum is often increased. This causes the debtor to become deeper in debt, often until it becomes impossible to pay more then the interest -- if that much.

In many ways it has been too easy for people to take bankruptcy, leaving many merchants and dealers without obtaining the money owed them. It has not been fair in many ways for many people.

For those who fell into bankruptcy by falling on hard times, it must be a difficult step to take a bankruptcy.

I have heard of people who filed bankruptcy but eventually ended up still paying their debts -- even when they were not required to do so.

A new law has been established to make it harder to take bankruptcy -- which should have occurred. Perhaps much of the reason is to protect the credit card companies.

Still, it protects many others from people not making payments on money owed. Anyway, bankruptcy is not as easy as it has been in the past.

A disadvantage in having it more difficult to declare personal bankruptcy is that it also becomes more difficult to take medical bankruptcy, due to high medical bills.

According to a study by Harvard University, half of the bankruptcies in the study that occurred in 2001 was caused at least in part by illness or medical debts.

Some of the places this study was reported included The New York Times, Los Angeles Times, People magazine, Fox News, and other sources.

It is understandable how such a thing can happen. A family is living from month to month and suddenly have an illness of some sort. If it is a medical catastrophe, it becomes really bad. It may not be considered as a catastrophe, but still be a disaster and place the family in a deep debt.

The scary part of the study is that in 68 percent of the medical bankruptcies, the debtors had health insurance coverage at the time of filing. This indicates that even if a person has good medical insurance, that insurance may not cover all of the bills.

According to the American Cancer Society, 65 percent of the cost for cancer is non-medical cost. Many people, having experienced cancer in their family, will say that there are many expenses. These non-medical expenses stem from a number of things, including loss of income -- often the lost of two incomes.

There are deductibles and co-payments, transportation costs, lodging and more.

So many having health insurance and still going into bankruptcy indicates many things. It indicates that our insurance may not cover the expenses that we thought that we might incur. Perhaps the insurance was not any good. In some cases the employer went out of business or something happens that the insurance discontinued.

Because of the high cost of premiums, more and more are going to higher deductibles and co-payments. There are many non-medical expenses.

Cancer has been mentioned, but other diseases could put a person in a difficult position. It could also be a fall or some other type of accident that pushes a working person into bankruptcy, even with insurance.

Some in the study could not return to their old jobs after an illness or an accident.

Then when getting a new job, they may not be covered by insurance any longer, or pre-existing conditions keep them from getting insurance.

The researchers found that there was usually not one reason people went bankrupt, but more than one, often overlapping. There were also gaps in coverage, leaving people vulnerable.

Most people have been blessed with health and other things, that there has not been any major debts that would place them into bankruptcy. This type of research does show that there can be some major problems for almost anyone -- even with good health insurance. It urges us to be in the position that a major cost can be covered so a catastrophe would not bring financial destruction and to fill gaps that may exist.

It is impossible for the average person to be prepared for every expense that might occur, but more people could take steps that would provide for some of the medical catastrophes. Being prepared may be a step taken to prevent a medicial bankruptcy.