Medical debt continues to fuel bankruptcy filings across America

Though the recently enacted Patient Protection and Affordable Care Act (PPACA) will hopefully increase the number of Americans having the benefit of comprehensive health insurance, industry experts are mixed on what impact that will have on our nation's medical debt concerns. Medical expenses have skyrocketed in recent years in spite of advances in technology and pharmaceuticals that - theoretically - should have made treatment affordable for more people.

Why has this issue become so prevalent?

The growing amount of medical debt, our nation's aging population (along with medical breakthroughs that are making once-fatal conditions treatable and increasing life spans) and the recent recession that has lowered the income base for countless families have created a proverbial perfect storm of unmanageable debt that is fueling bankruptcy filings across the country. While it is true that bankruptcy filings have slowed as the economy has recovered, the fact remains that medical debt is a key factor for more than half of the people seeking bankruptcy protection each year.

Will widespread insurance coverage help?

An estimated 75 percent of the people whose medical expenses have driven them to bankruptcy have health insurance. Nevertheless, high premiums, unwieldy deductible amounts, uncovered treatments, prescription medications, over-the-counter supplements, specialist visits, out-of-network care and medical equipment costs are still too much for them to financially bear.

Some feel that the PPACA will change that, making medical expenses affordable enough for everyone who needs care. Others are afraid that, after examining coverage data for plans available through the federal HealthCare.Gov exchange and state-level insurance exchanges, that deductibles and low coverage amounts might actually make the problem of unmanageable medical debt worse.

Is bankruptcy a universal solution?

No matter what your unique financial situation, it is possible that one or more of the categories of federal bankruptcy protection could help you take control of your finances. If you have a steady income and can commit to a regular payment schedule, Chapter 13 bankruptcy might be a good fit for you. This kind of bankruptcy organizes your covered debts (some payments, like tax debt, most student loans and child support arrearages are generally not dischargeable in bankruptcy) into one single debt that you make monthly payments toward for a set time. At the end of the repayment period, remaining eligible debt will be discharged.

Chapter 7 works differently, but the end result is the same: you can get off to a fresh financial start. Chapter 7, instead of having you make monthly payments, will provide faster and less rigorous debt discharge. It is harder to qualify for Chapter 7 bankruptcy, though, and you must meet certain income criteria to be eligible. As in Chapter 13, some debts cannot be discharged with a Chapter 7 filing.

Do you need financial help?

No matter what your unique financial situation is, there are likely ways to get your debt under control. By working with an experienced bankruptcy attorney, you will learn about debt management or discharge options that can free you from creditor harassment, relieve your debt-related stress and get you back on the right financial path.