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Confusing medical billing systems, pt 2: cutting the knot of debt

In ancient Greek legend, the Gordian knot was akin to the sword Excalibur in the Arthurian legends. According to prophesy, anyone who could untie this incredibly intricate knot was destined to rule all of Asia.

Alexander the Great cut the knot with his sword - or so the story goes. It's an action that, in its utter simplicity, still has much to teach us.

In this post, then, let's continue our discussion of the twisted knot of medical bills that plague many people. It is fair to ask the question: Is filing for bankruptcy a way to cut the tangled knot and move forward toward debt relief?

As we noted in our March 12 post, there are many reasons why medical bills don't get paid and become medical debt.
• The bills themselves are so high, even for comparatively simple procedures.
• Medical professionals tend to bill separately, resulting in multiple bills.
• Computer-generated bills are sent out without any human thought.
• The role of insurance companies is often unclear, creating confusion about which bills are covered by insurance and which are not.

As a result, many Americans have medical debt that gets reported to credit bureaus and harms their credit ratings.

The scope of the problem is of concern to federal authorities. The Consumer Financial Protection Bureau's director has noted that 1 in 5 Americans has had their credit rating impacted by medical debt. And medical bills have become the biggest single source of business for collection agencies.

One Wisconsin man who filed for bankruptcy a few years ago told the New York Times about how difficult it was, with so many bills floating around, to know how much his family owed.

In short, if you are in need of relief from medical debt, don't despair. You have lots of company, and bankruptcy can be a good way to seek a fresh start.

Source: The New York Times, "When Health Costs Harm Your Credit," Elisabeth Rosenthal, March 8, 2014

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