You may be one health crisis away from a financial disaster. The rising costs of medical care can leave you having to decide between paying your medical bills and buying food. Here are some of the ways that you can handle medical debt that you can’t really afford. But before you go any further you should review your rights under the “Fair Debt Collection Practices Act” (FDCPA).
Request Account Validation
Basically this step requires the collection agency to prove that you actually owe the money. If they don’t do this you aren’t legally responsible to pay anything.
Ask for a Reduction
It’s in everyone’s best interest if you can pay back your medical bills. Call up the hospital or the clinic and ask for a reduction in your medical bills. In some cases, they may be able to negotiate the total amount down. This is common practice for those that don’t have adequate insurance coverage. They may also be willing to work out a payment plan with you. This will allow them to receive their money and reduce your financial burden. Remember that insurance companies typically pay only a fraction of what the medical provider bills. Therefore the “approved” amount is all that you should pay as well. Anything over this amount is actually more than the provider was expecting to get anyway.
Apply for a Loan
You may be able to apply for a personal loan from your bank in order to pay off your medical bills. Be cautious whenever you’re trading debt for debt. You need to make sure that the interest amount isn’t going to cost you more. The whole point of paying off one debt is so that you can manage your remaining debt effectively. You may be able to reduce your medical bills and pay the remaining balance with a lower interest loan.
Consider a Home Line of Credit
If you own the majority your home, you may be able to apply for a home line of credit. This will offer you a little bit of leeway when it comes to reducing your financial burden. Make sure that you’ll be able to make the monthly payments on the home loan. It won’t do you any good to eliminate medical debt only to find yourself homeless. You may also not qualify for this type of loan if you still owe your lender a large amount of money.
Look Into Bankruptcy Options
According to recent bankruptcy studies somewhere between 26% and 62% (depending on study parameters, and the year conducted) of bankruptcies are the result of significant medical expenditures, although that number has been dropping in recent years.
There are two types of bankruptcy that you can consider, chapter 7 and chapter 13 bankruptcy. Chapter 7 bankruptcy is more common for those who can’t pay their medical bills. You can only declare chapter 7 every eight years. This may not work for you if you have chronic health problems. Neither one is something that you should enter into lightly. Your credit will be obliterated for about a decade. So this is something that you should only consider as a last resort.
You have options when it comes to handling your medical debt that you can’t afford to pay. Consider all of these options carefully so that you can make the best decision.
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