Medical Debt Is at the Root of Many Bankruptcies

A medical crisis is extremely stressful. When that medical crisis is compounded by a financial crisis, some may feel the burden is impossible to bear without intervention. And those people are not alone.

A recent study by a credit-counseling agency shows that medical debt is the primary cause of approximately 20 percent of bankruptcies.

The Problem of Chicago Medical Debt

Of all things one can plan for, a serious medical problem is rarely one of them. Aside from seeking the most comprehensive, yet affordable, insurance coverage and perhaps taking advantage of certain tax breaks, it can be difficult to budget for such an event.

Even a seemingly small medical event can lead to large medical bills. No matter their origin, those bills could be sent to a collection agency because of the inability of the patient, or the patient's family, to pay.

Compounding the dilemma, some people may use their credit cards to pay their medical debts. While this can provide a temporary sense of relief, it may not be long until the interest builds up on the credit cards and the situation seems out of control again.

It is no wonder that so many people in Chicago - and the rest of the United States - seek bankruptcy as a solution to their overwhelming medical bills.

Options for People With Significant Medical Debt

People facing serious medical debt do have choices. They may find that working with their doctor or hospital will allow them to devise a comfortable payment plan.

If this does not work, however, the debtor may want to consider bankruptcy. Chapter 7 bankruptcy will wipe out the medical bills; Chapter 13 bankruptcy will create a three- to five-year payment plan, with the remaining medical debt canceled at the conclusion of the plan.

Ultimately, whether they live in Chicago or elsewhere, debtors with significant medical bills should weigh their options carefully.

Source: The New York Times, Medical Debt Cited More Often in Bankruptcies, Ann Carrns, 18 August 2011

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