• 02
  • September
    2011

In our previous post, we noted a recent analysis by a credit counseling agency named CredAbility, which showed that medical debt is increasingly becoming the primary reason behind personal bankruptcy filings.

The close correlation between medical expenses and bankruptcy filings has been known for some time. But what is interesting about CredAbility's analysis is the way in which the present economy is affecting both the availability of health insurance and the affordability of health care.

According to the senior vice president of counseling at CredAbility, Michelle Jones, many people struggle with medical debt due to a reluctance to default on health care payments. Many individuals will obtain a new credit card and rack up the debt on it rather than failed to pay their doctor. Once interest begins accumulating on the unpaid bills, the problem gets bad pretty quick. According to Jones, "people take extraordinary steps to pay [medical bills]."

Credit cards for health care are, in fact, not an uncommon precursor to filing bankruptcy. Individuals who have lost their job but are still covered under COBRA, or patients needing continuing therapy sometimes run themselves into bankruptcy. There is even a market now for care credit cards specifically designed for health care costs.

Individuals who have accumulated unbearable debt through medical bills may have other options besides bankruptcy, such as looking into credit counseling and getting on a debt management plan. There are pros and cons to such an approach, but it is worth considering.

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