The Major Causes of Bankruptcies...No, it's Not Job Loss!

Medical Expenses Cause Bankruptcies

Sixty-two percent of bankruptcies had medical expenses as their main expenditure item, says Harvard Law and Medical Schools along with Ohio University.

The report goes on to say 75% of the bankruptcy filers had health insurance, but it was not enough to cover their needs and they had to file for bankruptcy to survive. Furthermore, the report indicates it’s not enough to only “cover the uninsured; we need to reconsider health reform.”

Since employers have had to cut back on employee health care benefits, many are left with medical bills that can lead to financial crisis. Americans have lived without medical coverage, and when a medical condition rises they cannot foot the bill for treatment. There are over 20 million working class people who don’t have medical insurance.

Even those American workers who have medical insurance get hit hard with co-pays and are financially hurt in their ability to work and pay their bills. Though they may have a job, a major medical emergency can deplete their savings, IRAs, and any reserve funds they may have in their bank accounts.

The double-edged sword to this are the other bills that still need paying, like revolving debt, and mortgages. The medical bills take away all their money and they don’t have funds left to pay living expenses and their loans on their homes.

Some think they can file Chapter 13 bankruptcy and their problems will go away. The problems does go away…somewhat. Foreclosures are not protected by bankruptcy laws. Bankruptcy only delays the foreclosure process until finalization of the bankruptcy. Once finalized, the foreclosure process begins exactly where it left off before filing of the bankruptcy.

For example, a Redwood City homeowner is being foreclosed on, and three days before the foreclosure Trustee's Sale - when the homeowner will be evicted by the Sheriff - he files for Chapter 13 bankruptcy. The foreclosure is stopped at that point. Once the bankruptcy is completed, the foreclosure starts up again. And it starts at the point it was at in the process prior to the filing of the bankruptcy. This means, in this case, the Trustee's Sale will be in three days and the Sheriff will be knocking at their door soon thereafter.

It’s a sad state of affairs for people who have medical emergencies and end up losing their homes because of the high costs of health care. It happens all the time - 62% of the time, according to the Harvard Law and Medical Schools along with Ohio University's study.

If you would like to know more information on what your options are, if you are facing a bankruptcy, please feel free to contact Cliff Keith and Team at cliff@sfbayhomes.com.  I am here to help all I can. You may not like what I have to say, but I will tell you the truth. We will listen to you and try to help in any way that is most important to you. We are not lawyers and you may need a lawyer, which may be your only solution.   I hope you don’t end up losing your lovely Redwood City home.

Cliff Keith and Team have been helping homeowners and home buyers in Redwood City with all their real estate needs since 1976. Let us help you too.

Call today for your private consultation: 650-346-7366