Many Maryland readers are aware that high levels of medical debt can lead to serious financial difficulties. However, few understand how researchers compile the data needed to make such a claim. The following information is offered in the hopes of clarifying the methods used to determine which financial stressors can contribute to the decision to file for consumer bankruptcy, and the role that medical debt plays in that process.

One reliable source of data is bankruptcy schedules. These are standardized forms that debtors use to list all of their financial matters, including income, assets and debts. Within these forms, a total of all outstanding debts is given, as well as to whom the debts are owed. By using these documents, researchers can determine the portion of an individual’s debt that is based on medical care, as opposed to other forms of debt, such as credit cards, mortgages and car loans.

Another way to gauge the impact of medical debt is by means of personal surveys. While bankruptcy schedules can provide raw data on debt levels, surveys give researchers the ability to add a human component to the numbers. One study asked 446 respondents to list the reasons why they decided to pursue bankruptcy relief, and 26 percent of those asked listed medical debt as a significant factor in their decision to file for bankruptcy.

While these two research methods are able to provide a solid overview of the factors that lead many to choose consumer bankruptcy protection, it is not a comprehensive review of the realities of medical debt. Many individuals will struggle for years to pay down these debts before filing for bankruptcy, which means that a great deal of the cost will not be reflected on bankruptcy schedules. In addition, others will turn to credit cards to pay off some of their medical bills, which can serve to disguise medical debt as simple credit card debt. However, the information that researchers are able to gather does demonstrate the fact that going through a serious illness or injury is a leading cause of consumer bankruptcy, in Maryland and elsewhere.

Source: thecherrycreeknews.com, “Why medical debt and bankruptcy are growing problems”, Daniel A. Austin, Jan. 28, 2015