Report Indicates that Medical Bills Drive Women into Debt

July 28, 2012 (Press-News.org) The Commonwealth Fund, a non-profit organization that advocates for health care reform, recently released a report indicating that 26 percent of women in the United States struggled with paying medical bills in 2009-2010. These numbers pale in comparison to other nations. 13 percent of Australian women endured such problems, and only 4 percent of German women reported such trouble. With 35 million women uninsured (or underinsured), the report is further evidence that medical bills continue to drive women into debt.

In an interview with NBCNews.com, Commonwealth Fund Vice President Sara Collins explained that women are particularly at risk of not being able to afford medical costs. The report showed that women used more health services compared to men and insurers charged them more, even though women had lower incomes than men. The disparity was especially problematic with women in their childbearing years.

The report's findings also suggest that many Americans are still reluctant to default on medical expenses. Instead of not paying medical bills, they will often take out a new credit card (and create more debt) simply to cover health care costs. Before the real estate market crashed in 2008, it was very common for consumers to refinance their homes and use untapped equity to pay off medical debts. While they alleviated short term debt problems, interest payments eventually became unsustainable when other life problems intervened.

Tragically, most people do not realize the options available to them to establish payment plans to manage debt, or how retirement plans are protected in bankruptcy. As such, it is important for women mired in debt to understand their legal rights and options before depleting all of their resources.

Medical Debt under the U.S. Bankruptcy Code

Medical debts can be discharged in Chapter 7 or Chapter 13 bankruptcy in the same way that credit card debt and personal loans can be eliminated. Medical bills are essentially service debt - costs and expenses accrued as a result of undergoing treatment for a disease, procedures to correct health problems or administrative fees attached to medical care. As such, they are considered unsecured debt under the U.S. Bankruptcy Code, (meaning that there is no tangible property securing the debt). Through a bankruptcy petition, you may seek court approval to obtain a discharge, thereby eliminating your legal obligation to pay that debt.

So, while creditors can seek legal judgments and even garnish wages to collect on unpaid medical expenses, bankruptcy can protect savings accrued in 401k and other retirement accounts, as well as your car and home.

If you or a loved one is burdened with medical debt, an experienced attorney can help you make an informed decision about bankruptcy.

Article provided by Blaschko and Associates Law Firm, PLLC
Visit us at www.blaschkolaw.com/