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Medical bills leading cause of bankruptcy in 2013

Many Cincinnati residents may think that credit card debt and poor financial habits are the primary causes of bankruptcy. However, a new study from NerdWallet suggests that difficulty paying medical bills may be a much larger cause. NerdWallet says that medical bills lead to three out of every five bankruptcies, which makes it the number one cause of bankruptcies. An executive from NerdWallet says that the company's study on medical costs shows that medical bills can completely overwhelm a family's budget.

The study found that 56 million Americans under the age of 65 had trouble paying their medical bills in 2013. Nearly 35 million received a call from a collections agency while 17 million received a lower credit score because of the size of the bills. Nearly 10 million skipped paying for necessities like food and rent so that they could make their medical bill payments.

NerdWallet estimates that 20 percent of all American adults are struggling with medical bills. Furthermore, the stress of the issue may force many Americans to take actions that actually compound the problem. For example, NerdWallet says that 25 million Americans in 2013 skipped taking necessary medications in an effort to manage their medical costs. By not taking those medications, the patients may actually make their medical issues more severe.

Sometimes the most effective way to deal with substantial medical debt is to declare bankruptcy. Some forms of bankruptcy allow an individual to restructure their debts and maintain ownership of assets like their home. Other forms eliminate the debt, but also force the liquidation of assets. An experienced bankruptcy attorney could review an individual's medical bills and recommend which type of bankruptcy would be more appropriate.

Source: NerdWalletHealth, "NerdWallet Health finds Medical Bankruptcy accounts for majority of personal bankruptcies", Napala Pratini, March 26, 2014

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