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Even the insured suffer from medical debt, study finds

According to CNN, a new study suggests that more than 60 percent of people who go bankrupt in the United States are victims of medical debt. Even with medical coverage, this type of debt can take down some of the most financially secure Americans. A new study has found that medical bills increased bankruptcies by nearly 50 percent in a six-year period, from 46 percent in 2001 to 62 percent in 2007, CNN reports.

You do not have to be struggling financially to be caught under the bludgeon of medical debt. In fact, you can be just one accident or illness away from ruin in this country. If the recovery period of an illness or accident has a long duration, private insurance will only go so far.

A group of professionals from Harvard Medical School surveyed a sample of 2,314 people who filed for bankruptcy in early 2007. In the study, the researchers looked at the respondents’ court records and interviewed several of them.

The study found that 62.1 percent of the bankruptcies were the result of medical issues. Filers either had more than 10 percent of their pretax income in medical expenses, mortgaged their home to pay for bills or lost income due to an illness. Medically bankrupt families had an average of $17,943 in out-of-pocket expenses, including $26,971 for those who did not have insurance and $17,749 who did have coverage at one time. In fact, three-quarters of the surveyed people with a medically-related bankruptcy had health coverage.

The study shows that despite medical coverage, 78 percent of respondents ended up in financial trouble. Experts note that the insurance plans had loopholes related to co-payments, deductibles and uncovered services.

You may have been financially secure at one time; however, medical debt can eat away the income of even the most stable occupations. If you are struggling to make ends meet after a serious illness or accident, the bankruptcy process can relieve some of the financial stress caused by medical debt.

Chapter 7 and Chapter 13 bankruptcy are viable options. Medical debt is considered unsecured, which can be dischargeable through Chapter 7 bankruptcy. If you are not eligible for this type of bankruptcy, Chapter 13 may work for you. This type of filing helps reorganize medical debt. This might reduce your payment responsibilities. Through Chapter 13, a payment plan can be established, which allows you to repay a portion of your outstanding balances over a three- to five-year period. To learn more about your options for financial recovery, retain the assistance of an experienced bankruptcy attorney.

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