Bankruptcy Questions Answered

Bolster Your Finances: Prepare for Illness or Injury

While the exact numbers fluctuate from year to year, it’s common in the United States for bankruptcy filers to indicate that an unexpected injury or illness was a contributing factor to their decision to turn to bankruptcy protection to get a fresh start on their finances. So how can you prepare for such an event?

Think about Sickness When You’re Healthy

The first step to prevent an illness from becoming a financial disaster is to take a little time to think about what an illness would mean for you—right now, while you’re still healthy (hopefully).

• Work time: If you have limited sick leave and/or vacation days, an extended leave of absence (or even one lasting longer than a few days) could mean taking time off without pay and/or risking job loss. To prevent such a calamity, figure out whether you could logistically work from home. If so, figure out specifically how it would work and set aside time to propose the plan to your boss. The proactive stance will not only let you know where you stand but show your commitment to your workplace.
• Provisions: On a very basic level, serious sickness or injury may mean that you can’t get out of your home for a few days. If you live alone, that could mean you’d have to survive on the stuff in your shelves—so make sure you’re stocked with nutritious non-perishables so you don’t have to revert to expensive, non-nourishing delivery meals during your illness.
• Caretakers: While some sicknesses pass quickly enough and let you get back to your life, others require outside help even after you feel relatively normal again (think broken arms or legs). If you don’t know any of your neighbors and aren’t friendly with anyone at the office, you may want to make the effort to get to know a few people. A friendly neighbor might offer to run to the grocery store or pharmacy for you, and a close coworker can help you as you ease back in to office life.
• Money: This is the tricky part. The cost of medical bills, especially for major illnesses, can be daunting. But that’s all the more reason to start a savings account specifically for emergencies, if you haven’t already. Some financial analysts recommend socking away six months’ expenses, but if that sounds overwhelming, just focus on putting away some money from every paycheck. Eventually, small amounts will add up and you’ll benefit from the peace of mind that comes with knowing an illness won’t throw you into a nasty debt spiral.

Remember: you won’t feel like dealing with the details of sickness when you have the flu, so take a few healthy hours of your life to plan. If and when that pesky sickness shows up, you’ll be grateful you did.

Additional Resources

Medical Debts and Bankruptcy Filings

Medical Bills and Bankruptcy