When you consider the top reasons for bankruptcy, you may think that it usually just means people spent too much money. They took on an incredible amount of debt. It was reckless and they never had any chance of paying it off, so bankruptcy was the inevitable conclusion.
Many people think this way, and it’s true that it does happen. Credit card debt in particular can be difficult because of the excessively high interest rates. But spending is certainly not the main cause of bankruptcy and it is not nearly as common as people assume.
Outstanding medical debt
In reality, the number one reason for American bankruptcy is just medical debt. When people can’t afford their medical bills, they are often influenced to file bankruptcy to get a fresh financial start. This is even true for a lot of people who have health insurance, as it just does not cover as much as they assume.
There are a lot of reasons why medical debt leads to bankruptcy. One is simply that the U.S. has world-class healthcare with a lot of expensive and innovative treatments. Another is that medical care in this country is vastly more expensive than it is in other countries. As noted above, there are also issues where some individuals may think that they are covered by insurance when they actually are not.
But at the end of the day, someone is going to choose to get the life-altering medical care that they need, regardless of their financial situation. Since medical care is so often astronomically expensive in this country, this often leads to bankruptcy. Those who are facing it need to know what legal options they have.