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Medical debt contributes to rising number of bankruptcies

Any Michigan family who has been through a serious illness or has had someone suffer from an injury from an accident is familiar with the ways that medical bills can start to pile up. At first, for those who have health insurance they may seem manageable or there may be hope that the policy will cover the larger expenses. unfortunately sometimes a policy does not cover big costs because of a loophole or sometimes the person did not have insurance coverage at the time of the injury or illness.

So many people struggle to pay off outstanding medical debt that it is one of the leading causes of bankruptcy in the United States. A 2009 study from Harvard University found that medical debt was a primary reason in 57 percent of bankruptcy cases.

In fact, a new study from a consumer finance website determined that about 1.7 million people in the United States will declare bankruptcy this year as a result of overwhelming medical debt.

However, the impact doesn't end there. 17 million people will have their credit scores impacted by medical debt, and another 15 million will make the decision to use up all of their savings to pay their hospital bills.

When you see statistics like this, that familiar infomercial refrain comes to mind - "there has to be a better way!" While bankruptcy is certainly not a silver bullet (it still requires work and sacrifices) it can be a way to treat medical debt more equally to other types of debt and to restructure or discharge those which are simply not payable. In doing this, Michigan families can avoid prematurley cashing out a 401(k) or spending down all of their savings for one particular financial obgliation and can take the time to look at the bigger picture.

Source: Law Firm Newswire, "Report: Bankruptcies Due to Medical Bills Will Impact 1.7 Million Americans in 2013," Aug. 22, 2013. 

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