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Medical debt grace periods begin in September

There are many paths to consumer bankruptcy -- living beyond one's means, out-of-control spending patterns and fiscal mismanagement -- that are rooted in poor saving and spending habits. As such, with time and effort, couples and individuals can eventually get their finances back on track.

However, the primary reason adults file consumer bankruptcies today in America is because of unmanageable medical debt.

Life can change in an instant

One never knows what the future holds. You can leave for work in the morning and get into a catastrophic accident that leaves you permanently disabled. A sudden stroke or serious cardiac event might land you in hospitals and rehab units for therapies to help you relearn basic daily living skills.

Even consumers with good health insurance policies can find themselves overwhelmed by mountains of medical bills due to serious illnesses or injuries. In 2016, 20 percent of United States residents age 64 or younger struggled to pay off accrued medical bills that were not covered by their insurance.

The Consumer Financial Protection Bureau issued its report in 2014 that stated approximately 43 million consumers wound up in collections because of medical debt. For 15 million of those American consumers, their medical debts represent the sole blemish on otherwise healthy credit histories.

Relief is on its way

Consumers with medical debt will get some respite this fall. On Sept. 15, the trio of major credit bureaus — Equifax, TransUnion and Experian — will begin implementing a six-month transitional period wherein they leave off records of consumers' medical debt from their credit reports.

This additional 180 days provides patients some extra time to resolve disputes with their health insurance providers without tanking their credit scores in the process. It also provides a little breathing room so patients can pay down their medical bills and/or get approved for loans that will pay them off in one lump sum.

A final benefit of this new policy is that the credit bureaus now will erase the record of outstanding medical debts from Americans' credit histories as it gets paid — by them or their insurance companies. This is of primary importance, as a checkered credit history can make home and even vehicle purchases much more difficult and expensive.

Of all of the factors that comprise consumers' credit scores, the most important one is your payment history. This factor makes up 35 percent of your total credit score, so the additional time to eliminate debt can make a big difference to those consumers hovering over the precipice of bankruptcy.

When time is not enough

Far too few consumers insulate themselves from the perils of unforeseen medical debts. Offsetting potential financial crises with emergency funds to pay at least three (and potentially six) months of bills is optimum, although not always feasible.

Also, some consumers are simply not going to be able to dig themselves out of medical debts within six months, especially if an insurance company doesn't side in their favor in disputes. For some, this grace period merely forestalls the inevitable — filing for Chapter 7 or 13 bankruptcies.

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