During the last six years, fewer Americans have filed for personal bankruptcy. In fact, according to research by Consumer Reports, bankruptcies have declined by 50 percent. According to Consumer Reports, this decrease is partially the result of the Affordable Care Act, which makes healthcare easier and more affordable for Americans to get.
Many legal experts and bankruptcy law authorities agree with Consumer Reports on this point. Prior to the Affordable Care Act, medical debt was one of the leading causes of personal bankruptcy.
Here's why medical debt can lead to bankruptcy
Imagine you're a responsible bill payer who has never missed a payment on any loan, utility or credit card bill. As a financially responsible person, you follow your budget to the letter and even have the recommended six-month slush fund available to live off of in the case of a financial emergency. The thing is, you never expected to get brain cancer and require expensive surgery.
As your medical bills piled high, it eventually became impossible for you to pay them down. As a financially responsible person, you soon realized that filing for bankruptcy was your only option to get your financial situation under control again.
It's easy to buy a cheaper car to avoid getting out of debt. It's easy to refrain from buying a fancy purse because you can't afford it. However, when your very life is on the line, the decision to go into debt to receive life-saving medical care is one that the even the most financially responsible person will always make.
Other reasons why bankruptcy filings have declined
It's important to remember that the Affordable Care Act is by no means the only reason why bankruptcy filings have declined since 2010. There is the fact that the U.S. economy has improved dramatically. Also, in 2005, the government passed laws making it more difficult to file for bankruptcy.
Nevertheless, experts agree that easier and more affordable health care has helped put a significant dent in national bankruptcy rates. Yes, you can save your six-month slush fund. Yes, you can make responsible financial decisions, keep a strict budget and have a secure job. However, if you don't have health insurance, you're at serious risk of suffering from medical debt problems later on down the road.