Bridgeport Law Blog

Medical costs continue to rise, in Connecticut and across the country, and many people have been forced to take on or carry debt in order to afford necessary health care. There are ways that people can avoid putting medical bills on their credit cards or reduce the amounts that they need to charge. Among them are insurance options, paying down existing debts, payment plans and using cards as a last resort only.

High medical bills may be avoided by the use of insurance. While health insurance can be prohibitively expensive in some cases, there are options in the U.S. for people to purchase insurance at discounted rates. Some people do not buy insurance because they are in good health, but medical issues can crop up suddenly and leave the person with significant bills. Paying down other debts might help people avoid putting medical expenses on their credit cards. Paying the same amount in two payments, one earlier in the month, can reduce balances faster.

Older adults in Connecticut could be at risk of bankruptcy because of medical debt. When people who are older file for bankruptcy as a result of medical bills, they have usually run out of savings. Many are either not working at all or working reduced hours, so their income is limited. In 1991, just 2% of bankruptcy filers were 65 and over compared to 12% now.

In addition, the number of people 55 to 64 who filed for bankruptcy in 2016 was up 66% compared to 1991. For people 65 to 74, there was an increase of 204%. Some of these people are in the situation of one 66-year-old retired handyman who said that because of multiple injuries, his could no longer keep up with his medical expenses and had to file for bankruptcy. He hoped to be able to work out a loan modification with his bank that would allow him to remain in his home of 40 years.

New Jersey consumers who are in debt have several options to reduce or eliminate it. There are many factors that may influence which tools they use to reduce the amount that they owe to creditors. For instance, those who make $100,000 a year may be able to commit to paying creditors in full without the need for a debt settlement or bankruptcy. Those who have a limited income may want to pursue a Chapter 7 bankruptcy.

One primary advantage of Chapter 7 bankruptcy compared to a debt settlement is that any amounts that are forgiven in bankruptcy will not be considered taxable income. It is also important to consider that there is no guarantee that creditors will work with debtors to forgive some or all of their debts. Even if a deal can be reached, the terms of the deal will likely be slanted in favor of a creditor.

People in Connecticut and across the country are facing an increasing burden of credit card balances. According to a credit card debt study by WalletHub, Americans began 2019 owing over $1 trillion in credit card bills. In the second quarter of 2019, consumers nationwide accumulated $35.6 billion in credit card debt, a national record for a one-quarter increase in debt. Over the year to come, the study estimated that another $70 billion in debt would be accumulated. Connecticut ranked 26th in the country in terms of debt accumulated, falling roughly in the middle of the pack.

Still, many Connecticut residents are finding it difficult to make ends meet. Credit cards can be handy for urgent expenses like car repairs, home fixes or medical bills, but people may find themselves facing difficulties paying off the bills, especially as interest expenses add up. The larger a credit card bill, the longer it takes to pay it off, which could then lead to even bigger interest payments. Around 39 million Americans have been in credit card debt for a minimum of two years, and many people have more debt than they do savings.