Avoid Bankruptcy By Avoiding Debt?

As a bankruptcy lawyer, I promote living as debt free of a life as possible to avoid getting into the type of financial trouble which leads to bankruptcy.    However it isn’t enough to just avoid debts for buying luxuries, it is also necessary for people to plan ahead for necessities like medicals.  People must consider the costs of medical treatment, co-payments,  dental work, and prescriptions and work them into their yearly budgets.

When I read a quotation this morning from the New York Times about American’s “need” for credit in order to obtain health care, it alarmed me.

QUOTATION OF THE DAY

“As more and more of the costs of care are shifted to consumers, people are going to need more credit. They are still going to need health care.” RED GILLEN, of Celent, an insurance and banking research firm, on the rise in financing plans for doctors’ bills.

As I looked at the full article behind this quote, I found that it was about zero percent interest loans to cover medical procedures, some of which appeared to be voluntary. The loans appear to be aimed at people with good credit, which means that they aren’t there to help out the poorest patients.  But if these loans are for people who have good credit, then why haven’t they planned ahead for the medical and dental procedures we will all surely face?  As people with good jobs and high incomes find themselves facing job loss, those that are living not only within their means but below their means, will be in a much better position to ride out financial problems.

It is important to put away a portion of income into savings for emergencies, which can include unexpected medical treatment, car or house repairs, and job loss.  No one can prepare for every emergency, but the less debt you have when the unexpected comes up, the easier it is to weather the financial storm.    As everyone knows, the financial crisis is making it harder to get credit, sell houses, and find jobs.  The best way to prepare is to check your budget, cut out what you can, and don’t borrow money that you don’t absolutely have to borrow.  Not even at 0%.

See: Patients Turn to No-Interest Loans for Health Care published in the New York Times By MILT FREUDENHEIM Published: August 30, 2007; Zero-interest financing for medical procedures has become one of the fastest-growing segments of consumer credit.

by Susanne Robicsek, Charlotte NC Bankruptcy Lawyer