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Medical debt can lead California residents to bankruptcy

Individuals in California file for bankruptcy for a number of reasons. No two financial situations are identical, and each path that brought a consumer or family to file for bankruptcy protection is unique. For many families, that path includes significant medical debt.

Data from the Administrative Office of the U.S. Courts asserts that more than 822,000 Americans filed for bankruptcy protection in 2007. A study by the American Journal of Medicine suggests that over 60 percent of those filings were the result of medical expenses. Medical debt can arise in a number of ways, through an extended illness or a sudden acute medical need arising from an accident or injury. No matter how the debt accumulates, however, it can quickly grow to a level that is virtually insurmountable.

When a family has exhausted all of their savings and stretched their income to the breaking point, there are very few options left to cover the difference between available funding and outstanding medical debt. Many take out consumer loans, place expenses on credit cards, and even borrow against their homes. These choices may help cover immediate needs, but in the long term only leads to greater levels of debt.

Medical debt leads many individuals and families into bankruptcy, even those who were thriving and successful before they required expensive medical care. While some California residents may view bankruptcy as a failure or a final destination to be avoided, it is important to keep the matter in perspective. Bankruptcy can help to discharge a large portion of consumer debt, including medical debt, and can bring a clean financial slate to those who need it most.

Source: The Columbian, "New front in disease fight: Medical Fundraisers," Marissa Harshman, Nov. 4, 2012

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