Medical debt is one of the most common reasons people are pushed into financial turmoil. Most medical debt comes unexpectedly and is often much higher than expected – the amount of money associated with medical treatment can be astronomical. The problem is compounded even more when a person is unable to work because of his or her illness – which means doctor’s bills continue to pile up with no earnings to offset the cost.
Luckily, there are several things you can do to deal with medical debt. In a time when your focus should be on health and healing, it is important to find a way to reduce the financial burden you face.
Borrow Smart
If you are just taking on the medical debt, it might be possible to finance what you owe. This allows you to make payments on the total debt and is a good way to avoid owing a lump sum that you cannot afford. Pre-arranging a payment plan can also help to put your mind at ease during the recovery phase.
Financing directly through the hospital or doctor can have higher interest, so if possible, shop around for a better rate. You don’t always have the time or ability to do this when dealing with an illness or injury, but it can save you money in the long run.
Settling with a Collection Agency
If your medical debt has reached the point where you are receiving calls from a collection agency, consider a settlement. Settling means you pay only a portion of the total debt owed. It can help you avoid a lawsuit and allow you to get your credit back on track.
If you choose to settle, make sure you get it in writing that what you are paying is the full and final settlement, and the collection agency will no longer contact you once the debt is settled.
The downside to settling with a collection agency is the need to pay taxes on the portion of the debt not paid. You’re still saving money overall, but you need to be prepared for the tax bill so you don’t end up with another debt to the IRS.
Bankruptcy for Medical Debt
If a settlement is not an option and you are unable to even meet the payment plan offered by the debt collector – or your attempt to pay your medical debt has resulted in other financial problems – bankruptcy might be your best option.
In most cases, medical debt is eliminated when you file for bankruptcy, which means you will never need to pay it back. Because of this, some hospitals are willing to negotiate with you once they know you are considering bankruptcy. You might be able to settle the debt in full with the hospital, instead of filing for bankruptcy.
If you cannot settle or reach a payment plan with your creditor, then bankruptcy is likely your best option. It will provide you with the fresh start you need. Hopefully, your medical has passed, and there’s no need to unnecessarily replace it with a financial problem.
Working with a bankruptcy attorney when you file for bankruptcy because of medical debt is the best way to ensure a smooth filing. He or she can help you determine what, if any, chapter of bankruptcy you qualify for, and prepare your petition.
If you have would like to know more about using bankruptcy to deal with your medical debt, or you need to speak with someone about filing, contact the law office of Frank J. LaPerch, PC.
