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Outstanding medical debts may require bankruptcy for relief

On Behalf of | Aug 15, 2022 | Bankruptcy

Medical emergencies leave many Americans with unmanageable debts. Individuals who experienced an unexpected illness may have taken time off from work to recover. An inability to return to work soon enough, however, could cause significant harm to a household budget.

As reported by Consumer Affairs, individuals with medical insurance incurred huge debts due to expenses their health plans did not cover. A 2022 study by the Kaiser Family Foundation discovered that 57% of survey responders had outstanding medical bills during a five-year period.

Unresolved medical errors could end up in collections

The Kaiser study also found that 61% of insured adults up to age 65 found a “surprise” statement in their medical bills. More than 50% believed their health care bills were incorrect. About two-thirds of study participants believed the errors on their medical bills represented services their insurance carriers should have paid. Some claimed they received statements for services their providers did not perform.

Patients responding to the Kaiser study also reported getting duplicate bills after paying off their balances. About half of the individuals discovering billing mistakes could not resolve their issues. Out of those patients with disputes, 32% found their providers sent incorrectly billed medical debts to collection agencies.

Medical debts sent to collections could create overwhelming hardships

Overall, about 20% of American households have unpaid medical debts, as reported by the Consumer Financial Protection Bureau. Between April and June of 2021, nearly 60% of those bills ended in collections. Whether they represent legitimate medical services or incorrectly billed charges, debts sent to collection agencies generally have serious effects on credit scores.

Lowered credit ratings often lead to even greater hardships for individuals recovering from serious medical conditions. Left with no recourse to pay off overwhelming health care bills, many Americans find that a bankruptcy filing offers an option for relief.