Bankruptcy is no picnic. Having to legally declare yourself officially broke in hopes of someday cleaning your slate and getting back on your feet isn’t easy for anyone, and there are always countless contributing, individual factors as to why someone finds themselves whispering “bankrupt.” For those who gamble away their savings, lose their homes and drink away the last of their pennies, they are left to lie in a bed of their own making. However, President Elect Obama is proposing a dramatic change in some legislature which would help those people and families who had to file bankruptcy because of medical bills. What does this mean for the average American and is it really as good as it seems?

A Bankruptcy Reprieve

If you were to take a peek at Obama’s economic agenda, you’d see this listed in a bullet point: “Obama and Biden will create an exemption in bankruptcy law for individuals who can prove they filed for bankruptcy because of medical expenses. This exemption will create a process that forgives the debt and lets the individuals get back on their feet.” Taken from the horse’s mouth, or as close to that as we can get before Obama takes office, this seems like a dream scenario. If you are someone who has had to give up everything to spend down to the last penny on medical expenses for your loved one (partially covered by your health insurance or not), this may seem like the savings grace you have been dreaming of. But are all people in this scenario: virtuous, thrifty spenders who have only gone into such horrendous debt due to medical bills?

(more…)