Bankruptcy

Do Medical Bills Cause Bankruptcy?

By Joseph McDaniel, Esq.

The methodology of the study and its conclusions were provocative.

It was exactly as though, in seeking the causes of death in men, the researchers had gone to the morgue, and discovered that 29% of the men who had passed away were bald, and that most of the other had at least 10% hair loss prior to their deaths.

And then concluded that baldness was the major cause of death in men.

Post hoc ergo propter hoc, I think they called it in Philosophy Class.

Medical expenses are a fertile ground for bankruptcy myths, whoever is involved in compounding those myths. I blogged a while back about a medical bill/bankruptcy myth, but it appears that they'll keep on coming.

For the record, my position is that medical bills are often a PROXIMATE cause of a bankruptcy, but they're more in the nature of a precipitating cause than a root cause.

Bankruptcy cases come into existence like a game of Jenga --that is, a family will have credit card bills, and they're no big deal. Then the amounts charged eventually pile up, and that's a big deal, because the payments go up. But everything looks fine from the outside because mommy and daddy are both working their brains out and taking every chance for overtime they can get.

Then one spouse gets fired, and one of the credit cards goes into default, and the interest rate goes up to 35%. And the family sells furniture or goes into the small retirement fund to make ongoing payments on bills.

Then the remaining spouse gets sick, and is out of work for a month. That's a month of NO INCOME.

That month of no income results in defaults on all the outstanding credit card bills, and a dozen credit cards with interest rates of 35%; and probably a lawsuit or two, eventually.

And then there are medical bills on top of all that.

And just like a game of Jenga, everything falls down.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on June 07, 2009 (boomark / email).