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Bankruptcy and medical debt - A continuing problem in the U.S.

Contrary to what people may think, overwhelming medical debt is the primary reason most people file for bankruptcy. In fact, a recent Harvard study found that medical debt accounts for about 62 percent of bankruptcies in the United States, with 72 percent of those individuals on some sort of health care plan.

Medical bills are considered unsecured debt, which means they can be fully discharged in Chapter 7 bankruptcy. For Chapter 13 bankruptcy, most of the debt is discharged and the rest is put into a secured, protected repayment plan.

Despite efforts to change the tide, affordable health care continues to elude a large portion of Americans. It is estimated that in 2013, 1.7 million people lived in households experiencing bankruptcy due to medical costs. One reason for this problem is the growing number of health insurance policies with high deductibles. Most people end up owing hundreds of dollars before their insurance even kicks in.

In addition to medical bills, people often use their credit cards to pay for deductibles, copayments and other medical expenses. This adds to the debt, and the number of creditors.

Fortunately, credit card bills are also unsecured debt, so they can be discharged along with the actually medical debt. If an individual chooses Chapter 7, all of the debt will be discharged. However, there are income restrictions to this type of bankruptcy. In many cases, Chapter 13 is the better solution. Especially for those who are employed and own a home or other property they wish to keep.

If you are struggling with medical debt, consider filing for bankruptcy. Contact an experienced attorney to discuss your options.

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