Medical Debt or Credit Card Debt? How to Avoid Medical BankruptcyMedical debt causes sleepness nights for countless people. Unpaid medical bills mean that pursuance from collection agencies, high APR credit card debt and medical bankruptcy are the likely outcomes. Although financial assistance for medical bills is rather limited, there are some effective ways to deal with medical expenses that you cannot afford to pay. Medical Debt Statistics - 116 million American's under the age of 65 had accrued some debt due to their medical bills. - 39% had used their savings to pay medical fees. - A third of U.S. citizens aged between 18 and 65 spend more than 10% of their disposable income on either health insurance or miscellaneous medical fees. - 30% put medical expenses on their credit card. - 28% of people are attempting to clear medical bills through a series of monthly instalments. - 27% experienced difficulty paying for medical care. * Figures provided by the commonwealthfund.org. Credit Card Debt Behind Escalating Medical Bankruptcy Figures According to the Common Wealth Fund, 21 million American's had accrued credit card debt due to medical expenses. The typical process is as follows: - Unpaid debts are passed on to a debt collection agency. - A judgement is taken out by the healthcare provider. - The debtor clears their medical bill with his credit card. - The interest on credit card debt starts to climb. In order to eliminate it, the debtor declares medical bankruptcy. How to Avoid Bankruptcy - A very high percentage of hospital bills are inaccurate. Although performing a manual inspection is possible, it may be better to use a professional service that has considerable experience with such matters. It's possible to reduce your debt by thousands of dollars. - Charitable assistance is rarely advertised, but may be available. Check to see if financial assistance is available as early as you can. - Credit card debt attracts a higher rate of interest than medical debt. A Consumer Action credit card survey in July 2008 showed that the average rate of APR on an unpaid card balance was 13.54%. It's better to arrange a monthly repayment schedule with a medical provider because the repayments will be lower. - If the repayment of credit card debt isn't affordable, medical bankruptcy isn't the only option. Consider an alternative, such as debt settlement, in order to become free from debt. Although medical bankruptcy may still have a stigma attached to it, well over a million people file for bankruptcy each year. You're not alone. Filing chapter 7 could mean that you are free from debt in just 4 months. The danger is that the same medical condition will return. It's only possible to file under chapter 7 once every 8 years. Relevant Articles: Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding. Updated: 5 May 2011  |