The Affordable Care Act Drove Down Personal Bankruptcies

Medical bills are a leading cause of people filing for bankruptcy in Ohio, but the situation has improved since the adoption of the Affordable Care Act (ACA).  Since the act went into effect and expanded public healthcare coverage, fewer Americans have taken the step of filing for personal bankruptcy.  Filings have dropped about 50 percent, from 1,536,799 in 2010 to 770,846 in 2016.

Unlike other causes of debt, medical bills are often unexpected, involuntary, and large. Even people who have always been financially stable can find themselves facing financial disaster if they are hit with a major medical problem.  Just one serious illness can result in bills mounting up to the point where they can no longer be met.

People often take on additional credit-card debt to cover mounting medical bills, and since credit cards often charge high interest rates for unpaid balances, debt increases rapidly.  As a result, individuals deplete their savings and wind up unable to pay for necessities such as rent, food and utilities.

The skilled and seasoned Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer understand that financial problems can happen to even the most well-intentioned people.  We offer a free consultation to evaluate your financial situation and to come up with a debt-relief plan that’s best for you.  Call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email for your free consultation.

Factors Contributing to the Decline

1) The ACA.

The ACA provided health coverage to many more people, expanded protections, and helped some 20 million more Americans get health insurance.  Individuals with sufficient health insurance are able to pay for the medical care they need for themselves and their families, without getting into debt.  They are more apt to go to the doctor for preventive care, which encourages early detection of problems and helps health issues from escalating and becoming even more expensive to treat.  Having coverage for medical catastrophes keeps individuals from being hit with astronomical medical bills they cannot meet.

According to the Consumers Union, some of the most important financial protections of the ACA apply to all consumers, whether they get their coverage through ACA exchanges or through private insurance. These provisions include mandated coverage for pre-existing conditions and provisions for young people to be covered by a family policy until age 26.  Also, on most covered benefits, there is an end to annual and lifetime coverage caps, something which previously could result in catastrophic bills once the cap was reached.

According to the Centers for Disease Control and Prevention, the percentage of those reporting problems paying medical bills in the last 12 months has dropped from 21.3 percent of households when they first asked the question in 2011 (56.5 million) to 16.2 percent in 2016 (43.8 million).  That means almost 13 million fewer Americans are no longer facing collection notices from a doctor or hospital.

In addition to help from the ACA, there are other factors contributing to the decline in bankruptcies.  These include:

2) The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

This Act made it more difficult for consumers to file for bankruptcy. The law required credit counseling and income verification.  It also forced many people who might have filed for Chapter 7, which discharges (eliminates) most debts, to instead file for protection under Chapter 13, which restructures debts over a three- to five-year period, but does not eliminate all debt. The Act requires much paperwork which increases the need to utilize an attorney, and this added to the cost of bankruptcy and eliminated it as an option for many poor individuals.

3) Improvements to the economy.

Due to the economic recovery that followed the housing crisis of 2008, Americans generally had fewer problems with their mortgages, and had better employment prospects and greater access to credit.  These changes put fewer individuals in the situation where they had to file for bankruptcy.

Still, despite this improvement, in a survey done by Consumer Reports in January 2017, 55 percent of consumers said they lacked confidence that they or their loved ones would be able to afford medical insurance to secure that care.  The situation is even more uncertain now, with Republicans trying to repeal the ACA.

Without insurance, the chances of having unpaid medical bills that can hurt your credit increase once again. Unpaid bills are often sent to a debt collector, and if the agency can’t collect, it reports the debts to the credit bureau.  This can significantly damage your consumer credit scores, as one medical bill can cause a drop of 50 to more than 100 points.

Contact Us For Help

If you are having problems with medical or any other kind of debt, the experienced and compassionate Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer, offer a free consultation to review your entire financial situation.

We examine your income, your debts and your goals, and make sure you are aware of all your options.  Bankruptcy, while a last resort for resolving medical debt, can offer individuals whose debt has become unmanageable a fresh financial start free from harassment from creditors.  We understand what you are going through and will walk you through the process.

Delaying can only worsen your situation, so call the Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer today!  Call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email for your free consultation so we can determine what debt relief solutions will work best for you.

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