How Health Issues Lead To Foreclosure

Did you know that medical debt is a leading cause of bankruptcy filings in the U.S?

Serious health issues can spiral into financial distress if homeowners are not prepared.

Even short illnesses or injuries can strain budgets. Imagine how devastating prolonged health problems could be - especially to people without proper insurance.

This financial stress can eventually make it really hard to keep up with mortgage payments and property taxes.

In this post, I’ll shed some light on exactly how health problems lead to foreclosure.

How Health Issues Cause Distressed Properties

Here are the main reasons why health issues make properties distressed:

Also Read: Other Causes of Distressed Properties

High Medical Bills

Medicine and treatments are SUPER expensive.

Even insured families can rack up significant medical debts from hospital stays, surgeries, treatments, medications, and more.

Out-of-pocket costs like deductibles and co-pays add up quickly, leaving families struggling to pay thousands or even tens of thousands of dollars.

For uninsured people, the costs are astronomical.

These crushing medical expenses make it extremely difficult for families to continue affording their mortgage payments.

Loss Of Income 

Many health conditions might force people to miss extended periods of work to recover or receive treatment.

The lost wages from taking unpaid time off, having hours reduced, or even losing employment altogether can completely derail a household's budget.

Most families rely on their income to make mortgage payments and cover home repairs, so this sudden loss of regular earnings makes it a desperate struggle to keep up with house payments and maintenance.

Also Read: How Overleveraging cause Distressed Properties

Even a brief gap in income can send the entire household budget into a tailspin.

Need For Relocation

Sometimes health situations require major lifestyle changes. 

The homeowner might need to move to a more accessible home to accommodate disabilities or relocate closer to caregivers and medical facilities.

These moves can lead homeowners into distressing situations. 

If they don’t have the money to move they would have to sell the home - and they need to sell it fast so they end up selling for cash offers at a loss.

Or if they cannot physically or financially maintain two households during the transition, they risk foreclosure on the original home.

Property Neglect

A chronic injury or illness can really hamper a homeowner's ability to keep up with regular home chores and fix things that need attention too.

If the homeowner can't physically do the work or afford to hire someone, the house can start to deteriorate fast.

Also Read: Physical Distress In Homes

This will decrease the property value and even result in it being deemed unfit for living.

Plus, putting off repairs ends up costing more in the long run as issues get worse.

Emotional Distress 

Coping with a major illness or serious injury takes an enormous emotional toll on families.

The daily stress and anxiety of dealing with health issues leaves little energy or motivation to stay on top of household duties and maintenance.

Add financial worries and uncertainty into the mix, and they'll easily become overwhelmed.

This will lead to neglecting finances, forgetting bills, and avoiding necessities like repairs. It becomes difficult to find the emotional strength to handle home obligations as well.

The Downward Financial Spiral

All of this will make the homeowners caught in a dangerous downward spiral.

Missed mortgage and property tax payments lead to damage to credit scores, making it difficult to refinance or qualify for hardship assistance programs.

Lacking access to credit or relief programs means payments continue to be missed until foreclosure proceedings begin. 

Foreclosure causes further harm to credit scores and finances from which homeowners have great difficulty recovering without assistance.

Government And Non-Profit Assistance Programs

There are services that can help distressed homeowners get back on solid financial ground:

• Medicaid and Medicare help cover medical costs for those who meet income thresholds.
• The HUD and state agencies do house counseling and financial assistance programs to help homeowners avoid foreclosure. 
• Non-profit credit counseling services and legal aid organizations can help negotiate medical bill reductions and set up manageable payment plans.

Wrapping Up

The best way for homeowners to mitigate risks is to build emergency savings, and get insurance to replace lost income if needed.

And it's always best to seek assistance early at the first signs of financial difficulty. 

Letting problems spiral out of control makes recovery much more difficult.