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Medical debt most common cause of bankruptcy in United States

Since President Obama signed the Affordable Care Act, many Americans, including Tennessee residents, may be expecting relief from the financial burdens of medical debt. Unfortunately, that may not be the case, especially for people who need medications to maintain their health.

One 64-year-old woman, for example, thought that the ACA would help her pay her medical bills, which had accumulated over several years because of medical conditions that she and her 79-year-old husband suffered for years that required expensive medications. When the woman lost her job and employer-provided insurance, a sympathetic pharmacist helped them and extended their credit. With 17 prescription medications between them needed to maintain their health, the couple used their credit cards to make nonmedical purchases including food and other daily necessities. Although she is thankful that the ACA helped some of her debt and may help the couple in the future, the couple's total debt was not affected and they ended up filing for Chapter 7 bankruptcy.

Some but not all medications are covered by insurance. This means some people face financial difficulties because of out-of-pocket costs, including prescriptions. In fact, recent statistics reveal that medical debt is the leading cause of bankruptcy. A 2013 federal government report found that Americans paid $41 billion out of pocket for prescription drugs.

Medical debt has both emotional and financial impacts on Americans. Fortunately, debt relief options are available to help residents recover from medical debt-related issues. A Chapter 7 bankruptcy filing, for example, can stop creditor harassment and allow individuals to repay debt through asset liquidation. If someone worries they might lose their house, car or other personal properties, bankruptcy exemptions may be available to help them keep their property.

Source: CNBC, "Medication costs fuel painful medical debt, bankruptcies," Dan Mangan, May 29, 2014

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