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Medical debt a factor in more than half of bankruptcy cases

Experiencing an unexpected illness or injury can be life-altering. It can take a significant amount of time for a California family to adjust to the new reality that follows certain types of medical issues. Even more sobering for some is the financial fallout of a serious medical concern. High health care bills can quickly spiral out of control, leaving some considering filing for personal bankruptcy to gain relief from medical debt.

When looking at the issue of health care costs, it is important to understand that not all medical bills are created equal. In fact, patients with insurance coverage, whether it be through government programs such as Medicare and Medicaid or private insurance, tend to pay far less for their health care than those who are uninsured. Even the president of the American Hospital Association believes that the current system is 'broken,' although he also states that it is the result of decades of evolution and is unlikely to change on its own.

The new federal health care law expected in 2017 may bring some relief to the uninsured. As many as 27 million uninsured Americans will receive coverage through the new law. However, there is nothing within the law that addresses the markup that hospitals can charge. The Internal Revenue Service has proposed regulations that would limit the billing amounts to uninsured patients to the same levels as billed to those who have coverage. This change, however, only applies to nonprofit hospitals, and for-profit ventures would not be subject to the same requirement.

When medical debt has brought one's financial stability to the breaking point, it may be time to consider options for debt relief. One path to fast and lasting debt relief for California residents lies in filing for personal bankruptcy. Bankruptcy protection could stop creditor collections calls, halt wage garnishments and foreclosures, and lead to the discharge of a majority of unsecured consumer debt.

Source: nj.com, "Uninsured Americans get hit with highest medical bills," March 11, 2013

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