Medical debt is one of the leading causes of personal bankruptcy filings.
Healthcare costs have been rising at a rate well above inflation for years, and they now make up a significant portion of the income expenditure for many families, even those without chronic medical conditions. Though treatment expenses vary widely depending from one region of the country to the next, the simple fact remains that even basic medical care – like that needed for a broken bone or simple infection – can be extremely expensive.
Of course, the costs of treating chronic or terminal conditions like cancer can be much worse; a recent study by the National Institutes of Health found that one-third of all cancer survivors between the ages of 18 and 64 had incurred substantial debt because of their treatment, and three percent of them had filed for bankruptcy because they were unable to pay medical bills.
The Affordable Care Act isn’t a panacea
It was hoped that The Affordable Care Act (colloquially known as “Obamacare”) would lessen the healthcare-related financial burden on Americans by allowing greater access to health insurance coverage, but that hasn’t necessarily been the case. Several studies have found that the majority of the people seeking bankruptcy protection because of overwhelming medical debt are insured. Because of cost-shifting measures employed by insurance companies in an effort to keep premiums down, more people are finding themselves with higher deductibles and more out-of-pocket costs (for such things as doctor visit co-pays, medications, out-of-network providers and uncovered tests); the ACA might ironically increase the number of Americans with significant debt tied to healthcare costs.
To add proverbial insult to injury, medical debt is the fastest-growing subset of the consumer debt collection industry, with nearly 40 percent of personal debt collected annually being healthcare-related. Medical debt collectors are also known in the industry as being some of the most aggressive and harassing. In addition, medical debt is often reported to collection agencies much faster than other types of debt, which can greatly impact a patient’s credit rating and his or her ability to secure funding for any additional treatment.
What can you do?
So, what can a person facing medical debt do? Surveys of people with medical debt show that many of them are desperate to stop the harassment. They will forego paying utilities, buying groceries and purchasing much-needed medications, will take on additional jobs, and will make other sacrifices in an attempt to pay their medical bills.
If you are drowning in medical debt, there might be a better way. A personal bankruptcy filing – like one under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code – could allow you to get a fresh financial start. A bankruptcy filing will discharge your unsecured debt and free up funds to cover other expenses. Though these two types of bankruptcy are very different, the end result is the same: freedom from creditor harassment and the ability to begin anew.
To learn more about medical bankruptcy, and whether it is right for you, contact an experienced bankruptcy attorney in your area.