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The problems that lead to major medical debt and bankruptcy

While America has some of the best doctors and hospitals in the world, access to healthcare is still a struggle for many Americans. Hospital billing practices are unpredictable and irregular. And because of this, we may end up getting charged a lot more than we thought we would despite having medical insurance.

Then there is the paperwork. Most of us cannot make sense of even an itemized medical bill. Things get overlooked, payments get missed, and we are soon getting calls from collection agencies. This is such a big problem, in fact, that medical debt is the number-one cause of personal bankruptcy in the United States.

If you are in relatively good health and therefore do not need emergency/urgent care, there are some things you can do to prevent significant medical debt in the first place. These include:

  • Reading through your insurance plan carefully to make sure you understand what is and is not covered
  • Making sure that all medical professionals and healthcare facilities you use are considered in-network
  • Calling the healthcare facility with questions about a bill right away and setting up payment plans to keep the bill from going to collections
  • Contesting charges that your insurance company initially refused to pay for

These are all proactive ways to make sure that your medical bills are as reasonable as they can be and that you don’t overlook something that could later be sent to collections. But as we mentioned above, these actions are not really possible if you need emergency medical care or develop an illness that must be treated right away.

Such patients cannot afford to “shop around,” nor can they worry about medical bills when they are suffering a health crisis. The good news is that there’s a way out.

Once your health has stabilized and you’re on the road to recovery, medical debt can feel overwhelming. Very few of us can afford hospital bills totaling tens of thousands of dollars, even with some sort of long-term payment arrangement. If that’s the situation you find yourself in, bankruptcy might be a good option for you.

An experienced bankruptcy attorney can carefully examine your debt to determine what can be discharged and what cannot. Most medical debt is usually dischargeable. Once your debt has been discharged or restructured, you can get back on the road toward financial health.

Source: Investopedia, “Preventing Medical Bankruptcy,” Caitlin Kelly, Oct. 23, 2014

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