Many Michigan residents who face the prospect of bankruptcy are mired in medical debt. According to a new survey, a top contributor to credit card debt is medical bills. The survey was conducted by Demos earlier this year to gauge the impact of the recession and the Credit Card Accountability Responsibility and Disclosure Act of 2009 on American consumers.
Almost half of low and moderate income households actually have debt from medical expenses on their credit cards. The average amount outstanding for such medical costs was $1,678. Half of those with medical debt said they delayed filling a prescription or skipped a doctor test or visit in order to lower their medical expenses.
The questionnaire also found that more than 75 percent of debt-laden households had out-of-pocket medical expenses during the last three years. More than 60 percent of them said medical costs contributed to their credit card debt. For those that put medical bills on their credit cards, the median debt was $800.
Demos' survey found that while medical debt continues to plague many Americans, the CARD Act has helped reduce the credit card debt for some. The 2009 Act requires credit card companies to provide better disclosure of late fees and the impact of interest rates. As a result, the survey showed that the average credit card debt dropped nearly $3,000 since 2008 and about one-third of households have been paying down their balances more quickly.
Even with the assistance from the Act, the legislation can only do so much. For those who cannot manage their debt or work it out with their creditors, bankruptcy may be a viable option.
SOURCE: The New York Times, "Medical Costs Contribute to Credit Card Debt," Ann Carrns, May 22, 2012