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Increasing medical debt places pressure on household finances

There are many reasons why a person seeks the debt relief found in personal bankruptcy protection. Chicago area residents are well aware that heath care costs are rising and that insurance companies are increasingly handing off larger portions of medical bills for the insured to pay. But whether you have insurance or not, high medical debt is a problem facing many people today.

According to a study conducted by the National Center for Health Statistics, 33 percent of survey respondents indicated that they were encountering difficulty in paying off medical expenses in 2011. Only one year earlier, however, that number was just 20 percent.

The numbers naturally differ when you divide the survey respondents into those with and those without insurance. Data show that 50 percent those lacking insurance had trouble making payments on their medical bills. But what might seem unusual is that nearly one in three of those with privately provided insurance experienced the same difficulties.

Study data also reveal that medical debt is a significant cause in personal bankruptcy, accounting for greater than 50 percent of all filings. But for those in dire financial straits because of significant hospital bills, emerging from bankruptcy can put them on the right track towards sustainable financial health. Individuals can file for Chapter 7 or Chapter 13, and each provides its own advantages. There are criteria for entering one chapter or the other, and each prescribes a way for the debtor to satisfy some of the debts and have others discharged.

The rules governing bankruptcy are complex, however, and anyone seeking debt relief through bankruptcy should consult with attorneys who have experience in bankruptcy law.

Source: The Houston Chronicle, "Insured but bankrupt: The hidden side of health care costs," Dr. Howard Brody, Mon. 19, 2012.

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