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Medical debt is a large factor in bankruptcy

As many Pennsylvanians know, medical care may result in debt that might damage credit reports. In fact, 43 million U.S. debtors have some form of medical debt. When this burden becomes overwhelming, studies show that this may result in bankruptcy.

A survey done in 2013 reported medical debt to be the biggest reason debtors gave for declaring bankruptcy. This survey indicated that medical debt surpassed loss of employment as a reason. This corresponds to a smaller study involving 500 debtors chosen at random. Of the 500 individuals, 61 percent had medical debt, which averaged $9,374. Eighteen percent had medical debt that amounted to over half of their income. The study concluded that the burden of such debt in this subgroup led to bankruptcy.

Medical debt differs from most consumer debt in that it may not be a choice made by the consumer. Credit ratings are affected by this debt, making it harder to secure additional credit or make a purchase on credit such as an automobile loan or, in some cases, securing employment. This may lead to a spiraling cascade of debt for the individual.

Bankruptcy may eliminate unsecured debt for an individual overburdened with debt. Depending on one's particular situation, either Chapter 7 or Chapter 13 bankruptcy may help. The difference between the two forms depends largely on the debtor's income and ability to handle a repayment plan.

An individual facing overwhelming debt may benefit from speaking with an attorney. The attorney may review his or her circumstances by looking at assets, debts and income to determine eligibility for either Chapter 7 or Chapter 13 bankruptcy. The attorney may also assist by helping the debtor file the appropriate forms with the U.S. Bankruptcy Court.

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