For many individuals, living paycheck to paycheck would be a significant financial improvement. Unfortunately, it is not uncommon for Americans to pass debt from one credit card to another or to sacrifice paying one bill in order to have enough money to pay a different bill. It becomes a dangerous balancing act wherein the slightest deviation from the norm can mean financial ruin.

These deviations, or financial emergencies, can come in the form of demotion, job loss, bankruptcy, home repair, vehicle accident or medical trouble. In fact, studies have found that 66.5 percent of all bankruptcies are tied to medical issues – either because of the high costs of medical treatment or time spent out of work. An estimated 530,000 families rely on the protections afforded by bankruptcy each year due to mounting medical debt.

What can be done?

Fortunately, the Bankruptcy Code was designed to give honest, hardworking Americans a way to gain a fresh financial start toward a stable future. Depending on certain unique factors, individuals will generally have to choose between filing Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is mainly used for the elimination of unsecured debts while Chapter 13 is a debt reorganization and repayment plan. An experienced bankruptcy attorney can provide the answers and legal guidance needed to make the right choice.

Studies agree that many Americans simply cannot absorb a significant financial challenge. In one study, Bankrate found that only 40 percent of those surveyed have enough saved to cover a $1,000 emergency expense. An out-of-pocket expense coupled with time spent away from work and the ongoing cost of medical treatment can quickly spiral out of control resulting in financial peril.