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Data review looks at Americans' struggle to pay medical bills

A recent data review by NerdWallet Health confirmed what has long been known: medical bills are pushing many Americans to the brink of financial ruin. In fact, the data review estimated that increasing medical bills will put 1.7 million more households in bankruptcy this year, making medical bills the leading cause of bankruptcy filings, outstripping bankruptcies due primarily to credit card bills and unpaid mortgages.

What is scary about the review is that having health insurance doesn't completely protect patients against above average financial hardship. Beyond that, there are roughly 56 million additional Americans who will struggle to make payments on their medical bills, but who will not file for bankruptcy. Among those who are insured, roughly 10 million adults with full-year coverage will get stacked with bills they will be unable to pay off by the year's end.

Roughly three out of every five bankruptcy filings is blamed on burdensome medical bills, and over 11 million Americans take on extra credit-card debt to pay for medical bills. This, of course, is not a wise move, since credit cards come with high interest rates, causing debt to increase more quickly when they are used to pay off debt.

The review also found that 15 million Americans will empty out their savings accounts to pay for medical bills, while another 10 million will find themselves unable to pay for regular monthly expenses because of medical debt.

Well there is no doubt that medical debt presents problems for many Americans. Bankruptcy, of course, is not the only option when medical bills pile up and threaten one’s financial safety. Debt counseling may be a viable option for some. But even before that, many hospitals are willing to work with patients in setting up payment plans for medical services. That said, hospitals are typically very quick to cut their losses and sell off debt to collectors.

Those who find themselves unable to pay medical bills and who think they may be headed for bankruptcy do well to consult with an experienced bankruptcy attorney to get the options out on the table. Doing so will give the debtor a better idea as to whether bankruptcy is the best solution, or whether there may be another viable alternative. 

Source: NBC NEWS, “Biggest cause of personal bankruptcy: Medical bills,” June 25, 2013.