Study: Medical debt is the number one cause of bankruptcy
Many Atlanta families who were once financially secure may have experienced an ovewhelming debt load caused by a sudden medical expense. These families are not alone. A recent study has found that the biggest cause of personal bankruptcy filings in the U.S. is now medical debt. In fact, this year alone medical bills were expected to cause about 1.7 million American families to file for bankruptcy protection.
The study was performed by NerdWallet Health, which analyzed U.S. Census data as well as data from the Centers for Disease Control and Prevention, the federal court system and a private foundation.
In addition to causing more bankruptcy filings than other types of burdensome debts like mortgages and credit cards, medical bills have also caused a great number of Americans to neglect their health.
According to the study, 25 million Americans avoid taking necessary medications in order to cut costs.
Additionally, overwhelming medical debt does not only afflict the uninsured. The study found that many households with medical coverage are still facing mounting medical bills, in part due to sky-high deductibles and out-of-pocket maximums.
Those who struggle with medical debt may choose to file for Chapter 7 bankruptcy in order to have their unsecured debts completely discharged and start fresh. Others, who are able to make some payments on their medical debts but have fallen behind, may be better off filing for Chapter 13 bankruptcy protection. This allows people to make new repayment arrangements. The best option depends on one’s unique situation, and it may be wise to seek counsel from a bankruptcy attorney before proceeding with either option.
Source: Today Money, “Biggest cause of personal bankrupcty: Medical bills,” Dan Mangan, June 25, 2013