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For people with long-term or serious illness, when it rains it pours. As if the pain of illness wasn’t enough, many people with long-term disease or disability end up struggling to pay off their share of high medical expenses as well. Accumulating medical debt not only adds insult to injury, it can also wreck a person’s credit record and make it even harder to get back on track financially.

Medical debt is one of the primary causes of bankruptcy, according to a study reported in the August 2009 issue of The American Journal of Medicine. The study found that 62.1% of bankruptcies declared in 2007 were caused either by medical debt or by loss of income due to illness. According to the study authors, the number of bankruptcies caused by medical expenses rose by almost 50% from 2001 to 2007.

Particularly noteworthy is the fact that people with health insurance are just as hard hit as the uninsured. The study found that three quarters of the people declaring bankruptcy for medically related expenses had health insurance.

Bankruptcy, of course, is toxic to a person’s credit score, and people who have had to declare bankruptcy will be seriously disadvantaged for years. Most will be unable to get access to any type of credit, including credit cards, mortgages, or car loans. And since prospective employers and landlords often look at a person’s credit report as well, it may even affect their ability to find employment or a decent place to live.

Unfortunately, even for people who do manage to pay their medical debt off, if that debt went into collection before it was paid off or a settlement was reached, it will continue to mar that person’s credit score for up to 7 years. Millions of Americans have failed to qualify for mortgages or end up paying higher interest rates or fees, because of resolved medical debt, which continue to blot their credit report for years.

A new bill introduced by U.S. Rep. Mary Jo Kilroy, D-Ohio aims to remedy that and prevent medical debt from haunting a person’s credit record after it has been paid off. If passed, the new bill will stipulate that medical debt, which has either been paid off or settled, must then be removed from the person’s credit records within 30 days.

The bill would be welcome news for the increasing number of Americans struggling with medical debt. According to a study by the Commonwealth Fund, more people are falling behind on their medical bills. Between 2005 and 2007, the number of adults in the U.S. with medical debt increased from 34 percent to 41 percent, about 72 million people or almost half of all working adults. Unfortunately, unlike personal debt or consumer debt, medical debt is something that people generally have no control over.

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