Medical Bankruptcy - Bankruptcy due to medical bills

vishy |

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First of all, let us first clarify one misconception about medical bankruptcy. There is no such official term as 'medical bankruptcy'. People go bankrupt due to huge medical bills which they are not able to pay and therefore go bankrupt. People refer to this type of bankruptcy as medical bankruptcy. Studies have shown that bankruptcy due to medical bills is one of the top two most common types of bankruptcy being declared by individuals. At HarvardUniversity, a professor known as Elizabeth Warren has studied and proved that medical reasons are one of the major factors in bankruptcy cases account in United States of America.

People may think that this situation will happen in case the individual does not have any medical insurance. But the fact is that even individuals having medical insurance are filing for bankruptcy due to medical bills. As per studies conducted, as many as 78% such cases had medical insurance in some form when the illness began. This goes on to prove that medical insurance is not helping the situation to a great extent.

In current times, United States President Barack Obama is working hard to improve the Medicare regulations which will help millions of Americans. If these reforms are implemented these will help to reduce the number of medical bankruptcies to a large extent. The proposals in the reforms include reducing the cost of long term health care, guarantee the choice of health care and doctors, improve patient safety, improve the conditions of getting medical insurance for pre existing illness etc.

It would be a great help for people if these reforms are implemented all over America. But this doesn't mean that individuals should stop working on their responsibilities. People should take care that they don't come into this situation at all. Below are the three steps which they can take:

Take adequate medical insurance for themselves and their families. It is mentioned above in this article that medical insurance does not guarantee that this situation won't happen. But the chances of bankruptcy will be much less if you get adequate medical insurance. I know that medical insurance is costly but it is worth that cost. Even if you have to cut corners in other expenses, you should do that and take extra medical insurance coverage.
Carefully verify your medical bills. Often times it is noted that there are errors in medical bills issued by hospital. As per law, you have the right to understand and question the medical bill in case you are not able to decipher it completely. Just by checking the medical bill, you may save thousands of dollars.
Never convert the payment of your medical bills into a loan. Don't pay your medical bills with your credit card which you can't repay. The credit card interest is too high and should be avoided at any cost. It is always better to talk to the Medicare provider and try to talk it out.

Medical bankruptcy or bankruptcy due to medical bills is becoming very common these days due to economic downturn. But you need to be financially prepared and take preventive steps to avoid such a situation since life after bankruptcy discharge can be very stressful.