Although the economy seems to be recovering, far too many Americans continue to live paycheck-to-paycheck. These individuals are just one unexpected life event away from facing financial ruin. Being in this position can be extremely stressful, and when one of those life events occurs, they may find themselves overwhelmed with no idea how to resolve their financial difficulties. This often happens when an individual is hit with unexpected medical expenses.
In fact, studies show that more than half of all debt reported to credit agencies are associated with medical costs. This medical debt can cause serious damage to an individual's credit rating, which can cause even more financial strain. It may not only be harder to obtain a loan or other line of credit, but people in this situation may face excessive interest rates when they do obtain credit.
Fortunately, a new law going into effect in September will curtail the immediate impact medical debt can have on one's credit report. Under that law, the major credit reporting agencies must wait 180 days before any debt caused by medical care is applied to an individual's report. This will hopefully decrease the amount of medical bills that are sent to collection agencies, giving debtors time to pay their bills or find other ways of resolving their owed debt.
As helpful as that may be, though, the truth of the matter is that many of the 43 million Americans who are currently being pursued by debt collection agencies in hopes of recovering owed medical bills will be unable to make good on their debt. When this happens, it may be time to consider other debt relief options, such as bankruptcy. That may sound daunting, but bankruptcy may lead to debt discharge and a fresh financial start. Thus, it is important to gain a full picture of the options available to you.