Home

Posts Tagged ‘medical debt’

Wednesday, July 1st, 2009

Medical Bankruptcy: Devastating Effects of Medical Debt

DrSteveB over on Daily Kos has a sobering look at that dramatic ways in which uncontrollable medical bills can change a life.

DrSteve gives us the tale of a man in Texas who was living his dream - married, owned his own company, had health insurance - until a car accident radically altered his life and left him homeless.

The medical bills quickly blew past what his insurance would cover.  The owner and driver of the other truck did not have insurance, like 10-20% of vehicle owners despite the mandate to buy auto insurance, so Mr. Benson and his insurance company were unable to go after that source.

I've been doing some research on medical bankruptcy lately, and this story was heartbreaking. Sadly, it shares much in common with many of the people who run into serious financial problems following an illness or injury.

Medical bills can quickly become overwhelming, even for the insured. If you need serious health care, the financial fallout is often more than just another bill.

Many people lose significant work time because of illness or injury. The new bills and loss of income may put strains on their mortgage or lead to an increased reliance on credit cards, which can also get out of hand quickly.

Fortunately, DrSteve's story has a happy ending:

Eventually, he wound up in a shelter, and eventually he was able to put his professional chef skills to work in the "soup kitchen."  From that he has worked his way back to sobriety, fulltime employment and housing.

If you're facing severe medical debt, don't wait to take action. If you need to get your debt under control, know that help is available.

Learn about the filing bankruptcy choice.

Tags: , ,
Posted in Setting the Record Straight about Bankruptcy | 57 Comments »

Thursday, June 4th, 2009

Medical Bills and Bankruptcy

The LA Times reports today on a Harvard study that shows medical bills played a role in 62 percent of all bankruptcies filed in 2007, a seven percent increase compared with 2001.

What's more, many of the people filing bankruptcy due to overwhelming medical bills had health insurance. From the LAT:

Medical insurance isn't much help, either. About 78% of bankruptcy filers burdened by healthcare expenses were insured, according to the survey, to be published in the August issue of the American Journal of Medicine.

"Health insurance is not a guarantee that illness won't bankrupt you," said Steffie Woolhandler, one of the authors, a practicing physician and an associate medical professor at Harvard.

It's not just high medical bills that contribute to bankruptcy, but also the lost wages and work time that an injury or illness can cause.

There is sometimes a stigma assocaited with filing bankruptcy, the idea that bankruptcy filers are irresponsible with their money. But this study shows:

Most people who filed medical-related bankruptcies "were solidly middle class before financial disaster hit," the study says. Two-thirds were homeowners, and most had gone to college.

Even if you plan for the unexpected, a sudden injury or illness can hit hard. Lost work time can cause your income to dry up, while extremely high medical bills turn a small, manageable amount of debt into an out-of-control giant.

Filing Bankruptcy and Medical Bills

For bankruptcy purposes, medical bills are considered unsecured debt.

This type of debt may be entirely discharged in a Chapter 7 bankruptcy filing.

In a Chapter 13 filing, your medical bills could be ordered and combined with other debts, and possibly reduced, in a bankruptcy trust.

Tags: , , , , ,
Posted in Setting the Record Straight about Bankruptcy | No Comments »

Wednesday, January 17th, 2007

New Study Ties Credit Card Debt to Medical Bills

Recent studies of bankruptcy petitioners have shown that medical expenses and associated lost income were a major factor in their financial problems, and consumer credit information from the federal government has confirmed that medical expenses are a primary reason for consumer borrowing, so it should come as no surprise that those without medical insurance and those who have faced major medical expenses over the past few years tend to have higher credit card debt.

A study just released by Demos reveals some interesting numbers:

  • Low and middle income households with a major medical expense in the past three years carry an average of 45.9 percent more credit card debt than similarly situtated households without a recent major medical expense.
  • The average credit card debt for families without medical insurance is 32.2% higher than that of families with medical insurance.

Although the evidence has been clear from the beginning that the vast majority of bankrutpcy filings were triggered by unforeseen trauma like job loss, serious illness, uninsured medical expenses, divorce, and death in the family, this connection between medical bills and consumer debt puts a new perspective on even those bankruptcy petitioners who list primarily credit card debt.  Credit card debt incurred to pay medical expenses hardly correlates with the picture of the "deadbeat" bankruptcy petitioner "running up" credit card bills irresponsibly and then shirking his responsibility.

Tags: , , , , , , ,
Posted in Bankruptcy and the Economy | No Comments »