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Medical bankruptcies not likely to drop after health care law

Something we write about frequently on this blog is the topic of medical debt. Our regular readers know that medical debt is a major contributor to personal bankruptcy in the United States. So much so that a 2013 study by NerdWallet Health found that medical debt was the top contributor to bankruptcy filings.

With the advent of the Affordable Care Act, there has been a certain amount of optimism that the situation might improve. Most of those who understand the issue never had such hope, though. The reason is that the availability of health insurance has little to do with keeping clear of medical debt. According to some research, 78 percent of those who file for medical bankruptcy had health insurance during the time they got into debt.

So, although the Affordable Care Act will allow more people to have access to health care insurance, it will likely not have a great affect on medical debt loads and the rate of medical bankruptcies.

There are, of course, ways to manage medical debt without filing for bankruptcy. It is always a good idea to at least attempt negotiating medical bills with a provider before they are shipped off to a debt collector. That being said, there are those for whom bankruptcy is the best option when dealing with medical debt. For these, it is important to work with an attorney to determine not only which type of filing is best—whether a Chapter 7 or Chapter 13 filing—but also to ensure that the process goes smoothly from beginning to end. This will ensure that one’s debts are discharged. 

Source: Fox Business, “Medical Bankruptcies are Still a Problem, Here’s What to Expect,” Donna Fuscaldo, February 18, 2014. 

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