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Medical bills driving more consumers to bankruptcy

More people are filing for personal bankruptcy because of medical expenses now than in years past, according to a new report from the credit counseling agency, CredAbility. The nonprofit agency reports that the number of individuals claiming bankruptcy related to medical debt has intensified in just the last few years. Approximately one in five or 20 percent of CredAbility's clients had filed for bankruptcy protection because of medical debt in 2010 and 2011.

The nonprofit credit counseling service reported that health care costs were less of a factor in bankruptcy filings in the two previous years. Medical bills were responsible for between 12 and 13 percent of 2008 and 2009 bankruptcies for CredAbility clients. Data analysis was gathered from 47,000 bankruptcy filings in 2011 and more than 100,000 filings for each of the previous years.

CredAbility executives say customers who have lost jobs have gone without health care coverage. Those who have medical benefits, including government-sponsored COBRA coverage, are squeezing budgets to pay for less affordable medical deductibles and premiums. The credit counseling group says consumers will go to great lengths to satisfy a medical debt, even at the expense of their own financial health. It is not unusual for bankruptcy filers to cover doctor's visits or prescription medications with multiple credit cards.

Credit counseling executives say being denied certain medical services is more feared by consumers than running up a high-interest credit card. Experts say creditor harassment happens faster with medical bills. Doctors and hospitals quickly send delinquent bills to collection agencies to avoid the high costs of resolving the problem.

A person's health should be a top priority no matter what. Unfortunately, medical services can be extremely expensive, leaving patients with astounding amounts of debt. These situations can be very overwhelming. Not only are people worried about their health or the health of someone they love, they are then stuck with not only debt, but the harassing phone calls of debt collectors. Fortunately, there may be a way to get out of it all. Filing for bankruptcy can not only liquidate debts, but it can also stop the phone calls from creditors. For many people, bankruptcy offers a fresh start to life and newfound financial freedom.

Source: The New York Times, "Medical Debt Cited More Often in Bankruptcies," Ann Carrns, Aug. 18, 2011

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