An unexpected job loss often results in losing an employer-provided health insurance plan. Without the means to cover personal or family member health care, medical issues may result in an overwhelming debt load. In many cases, bankruptcy may provide an individual or household with much-needed relief.
A survey conducted during the summer of 2020 revealed that 56% of American adults saw their medical debts placed with a collections agent. As reported by USA Today, 5% of the survey’s respondents owed at least $50,000 worth of past-due medical bills. Regardless of the amount owed, medical bills may have a devastating effect on an unemployed individual.
Increased medical expenses and extended unemployment
According to the survey, hospitalizations generated the highest volume of medical debt, and costs also increased due to lab fees, MRIs and follow-up visits. Some hospitals and doctors offer patients affordable payment plans, but the option may not exist for those individuals who do not expect to return to work.
An illness or a surgical procedure may require long-term recovery and rehabilitation, which may then cause an unemployed individual to postpone his or her job search. By the time an individual secures employment, he or she may have already fallen behind and accumulated a huge amount of debt.
Bankruptcy as an option for relief
When individuals with existing medical conditions experience a sudden job loss, they may soon run into serious financial troubles. Paying out-of-pocket for needed prescriptions or regularly scheduled treatments may cause other debts to fall behind.
When prospects for a new employment position do not appear likely in the near term, bankruptcy may bring relief from creditors seeking to collect on overdue medical bills and other consumer debts. It may also reflect the most realistic option to move forward from an unexpected job loss.
