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Is bankruptcy an option when medical debt becomes overwhelming?

Many working families in Texas have been forced to deal with financial stress over the last few years. Between the effects of the recession, fear of job loss and rising health care costs, families have a long list of potential liabilities to work through. Keeping this in mind, the unfortunate reality is that a single medical emergency could suddenly make it impossible to make ends meet.

According to research from the Commonwealth Fund, 41 percent of working-age Americans were having difficulty paying back medical bills. As medical debt stacks up against expenses, personal bankruptcy may become a reasonable option.

For those who have a regular income, but are still struggling with debt, Chapter 13 bankruptcy might be a route to a fresh start. Under this arrangement, an individual adheres to a repayment plan lasting three to five years. Once the bankruptcy term is completed, it may be possible to discharge remaining debts.

One thing to keep in mind is that medical debt can be included in bankruptcy filings, unlike some other types of debt. As such, many people who are over their heads with medical bills seek the assistance of bankruptcy.

Not long ago, federal officials announced new rules for dealing with medical bills. According to an Associated Press report, there are revised guidelines for working through disputes with debt collectors and establishing payment plans with providers. The hope is that this can help individuals work through the debt without having to worry about bankruptcy.

Of course, personal bankruptcy isn't the only way to eliminate medical debt, but it might be the right choice for some people. Everyone has a unique financial situation, so looking at all of the possibilities to relieve the stress of debt may be a wise way to move forward.

Source: The Associated Press, "New rules to help patients with debt," Linda A. Johnson, Feb. 17, 2014

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