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The source of medical debt and bankruptcy statistics

Most Pennsylvania residents are aware that one of the leading causes of personal bankruptcy is the medical debt that follows a significant illness or injury. However, few understand just how the statistics supporting this claim are gathered. A recent article takes a closer look at how we determine which factors are behind the decision to pursue personal bankruptcy, and the measures in place to ensure that those numbers are accurate.

One of the primary resources that researchers use when examining bankruptcy trends are the bankruptcy schedules that make up individual filings. These are the standardized forms on which debtors list the full range of their income, assets and liabilities. Here, debts are listed by both the amount owed and the party who is entitled to receive payment. By reviewing these documents, researchers are able to determine which portion of an individual's outstanding debt is owed toward medical costs.

In addition, surveys help researchers place a human aspect to the raw data collected from bankruptcy schedules. Surveys often ask respondents to give their reasons for seeking bankruptcy protection, and to rank those factors in order of importance. In this way, researchers are able to determine the level at which medical debt prompted a person to file for bankruptcy, as opposed to other influences -- such as the loss of a job or high levels of credit card debt.

When researchers combine the information gleaned from bankruptcy schedules and surveys, it becomes clear that, for many in Pennsylvania and elsewhere, medical debt is a predominant factor in the decision to file for bankruptcy. This may be due to the fact that financial difficulty that is prompted by a medical condition is usually not the fault of the individual who is injured or ill. As such, making the decision to seek bankruptcy protection may be easier for these consumers, as there are fewer feelings of guilt or responsibility for the financial challenges that arise from medical debt.

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

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