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Bankruptcy and medical debt: A growing epidemic

Americans spend more in health care costs than any other nation in the world, approximately 10 times the global average, according to the World Health Organization. Therefore it should be no surprise that individuals and families in the U.S. accumulate a significant amount of medical debt. It also isn't surprising that medical debt tends to be the leading cause of personal bankruptcy.

Medical debt can accumulate through outpatient care, inpatient visits, emergency care, nursing care and prescription costs. Many people have experienced rising deductibles in recent years, which leaves individuals hundreds of dollars in debt before health insurance even kicks in for the year. This is for individuals who have health insurance; for others, it can be much worse.

With no way to pay medical expenses, both insured and uninsured people may turn to credit cards to cover immediate financial needs. No matter the situation, the result is the same: rapidly accumulating debt.

Medical expenses and credit card balances are both considered unsecured debt. These can be discharged during personal bankruptcy, making it a viable option for those wanting a fresh financial start. In fact, according to a NerdWallet study, 1.7 million Americans lived in a household in 2013 that declared bankruptcy due to medical debt. Nearly 250,000 of those households were in California alone.

"In 2013 over 20% of American adults are struggling to pay their medical bills, and three in five bankruptcies will be due to medical bills. While we are quick to blame debt on poor savings and bad spending habits, our study emphasizes the burden of health costs causing widespread indebtedness. Medical bills can completely overwhelm a family when illness strikes," says Christina LaMontagne, VP of Health at NerdWallet.

Contact a bankruptcy attorney to discuss your situation and options for debt relief.

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