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Bankruptcy rates double when health insurance is lost

Mississippi had the fourth highest per-capita rate of personal bankruptcies in the nation in 2018, and the data suggests that more than two-thirds of them were filed because of overwhelming doctor and hospital bills. Comprehensive health insurance provides protection against spiraling medical debt, but many Americans find themselves without this crucial coverage each year after going through a divorce or losing their jobs. A recent study conducted by University of Missouri and University of Denver researchers reveals that individuals are twice as likely to file a Chapter 7 or Chapter 13 bankruptcy after going without health insurance for just two years.

The researchers made this discovery after analyzing data on 12,500 bankruptcies from the Bureau of Labor Statistics. Millions of Americans currently have health insurance because of the Affordable Care Act, but the future of the landmark 2010 law is uncertain. Attorneys from 18 states filed a legal challenge to the ACA after Congress voted to eliminate the individual mandate. If the litigation is successful, up to 20 million Americans could lose their health insurance.

More than half of Americans polled by the Kaiser Family Foundation said that financial concerns had led them to cancel or put off a visit to a doctor or dentist in the last year, and many of them were enrolled in a health plan. More than a third of the insured respondents said that they had difficulty making copayments or meeting their deductibles.

The nation's bankruptcy code was written to give people who are struggling to make ends meet the opportunity of a fresh start, but individuals with unmanageable financial situations are often reluctant to take action because of the myths surrounding debt relief. Attorneys with experience in this area may help dispel these myths and explain how Chapter 7 or Chapter 13 bankruptcy offers an escape from overwhelming debt. Attorneys ma also explain that the automatic stay issued when a bankruptcy is filed requires lenders to immediately cease their collection efforts.

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