Increasing Number of Americans Filing Bankruptcy
Recent data released by CredAbility, a nonprofit credit counseling agency that serves consumers throughout the United States, shows that an increasing number of Americans are filing for bankruptcy due to overwhelming medical debt.
Approximately 20 percent of people seeking financial counseling in advance of a bankruptcy filing now list medical debt as the primary cause of their financial troubles. This is up from a rate of about 13 percent over the last two years. The data is a good barometer of overall bankruptcy filings, since anyone considering bankruptcy is required to undergo credit counseling before filing.
Michelle Jones, senior vice president of credit counseling for CredAbility, suggests that people tend to get into trouble with medical debt because they feel bad about not paying doctors who have seen them through difficult times. Instead, consumers who can’t afford medical care will often pay their bills with a credit card. Although this may solve the short-term problem, the payments can quickly spiral out of control. This is especially true for consumers whose poor credit history causes them to have to pay very high interest rates.
Increase Largely Due to the Continuing Recession
Topping the list of factors contributing to the increase is the economic recession that continues to put a stranglehold on families throughout the country.
As of August 2011, the U.S. unemployment rate was 9.1 percent, meaning that 14 million Americans were out of work but looking. Another 8.8 million Americans were working part-time but were trying to find full-time jobs.
Workers who lose their jobs often lose their health coverage, too. Unfortunately, this doesn’t mean they lose their ability to get sick. Americans who are still working are seeing their health care premiums and deductibles rise as companies try to reduce costs.
Hospitals and healthcare providers have not been sheltered from the recession either, and they are increasingly quick to send medical debt to collections in order to protect themselves.
Don’t Let Medical Debt Overwhelm You
Consumers facing high-cost medical care have options, but it’s important to plan ahead so your medical bills don’t get out of control. Many hospitals have payment plans or charity programs to help financially struggling patients. Be sure to discuss all your options with your care providers before undergoing treatment.
If you are struggling with medical debt you may be eligible to get relief by filing for bankruptcy. You can learn more about your options by discussing your situation with a bankruptcy attorney in your area.