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What To Do When You Can Not Pay a Medical Bill

I found it interesting this week to read a report suggesting that more than 60 percent of the bankruptcies this past year were related to medical bills.  If you have never been caught in this situation, you probably have heard a story from a friend or relative that had an unexpected medical situation that left them with a five or six figure bill.  Whether it is being caught between jobs without medical insurance, or being confronted with the need for a treatment that is not covered by your policy, this is the toughest of spots to be in.  According to the most recent figures I have seen, more than 40 million Americans currently do not have medical insurance.  I have addressed the issue of how to make medical insurance affordable in prior articles, but today my focus will be what to do when you end up owing a large bill you simply can not pay.

1.  Do You Qualify For Federal Or State Assistance?

Depending on how large your medical bill is and your current financial profile, you may qualify for substantial help from any number of state or federal assistance programs.  More information on assistance from Medicaid.  I would also ask your doctor or a social worker what charities or other agencies are known to help people in your area with medical expenses.  This type of assistance is going to be based on your need, so don’t expect much help if you otherwise have the resources to take care of your own bill.

2.  Work Out a Payment Plan

One option that may be a win-win for you and your medical provider is for you to agree to a payment plan.  Despite the fact that you may owe tens of thousands of dollars, you may be able to resolve the situation by providing a detailed letter outlining for financial situation, including a proposal for a payment arrangement.  By entering into a monthly payment plan, you can usually stop any additional collection or legal action.

4. Avoid Using Credit Cards

Hospitals and doctors are quick to suggest that you use your credit cards to pay medical bills.  If you end up owing a five figure medical bill and then have to contend with double digit interest rates, you may have the ultimate recipe for disaster.  Also, it is important to understand that once your medical debt is transferred to a credit card, you are now dealing with what is likely a much more aggressive collection process.

5.  Negotiate A Lump Sum Settlement

If you have an enormous medical bill, it might be worth trying to arrive at a lump sum settlement.  I have heard stories of bills being settled for 30 to 50 cents on the dollar.  You may have to tap your retirement plan, borrow money, or even sell some stuff.  If you get a chance to take advantage of an attractive settlement offer, do so if it is at within your means.

6.  Do Nothing For Now

If you are unable to work out a payment plan, you may simply have to do nothing (at least for some period of time).  Until you are served a lawsuit, there is not much a creditor can do to you other than make annoying phone calls.  If the collection calls are becoming too much, you can put an end to that with a simple cease communication letter.

7.  Consider Bankruptcy As A Last Option

If you have exhausted all other options and you are now being sued for your unpaid medical bills, you may have to consider bankruptcy.  Bankruptcy has become more complicated in recent years.  Depending on your income and the amount of debts you have, you may not qualify for a Chapter 7 Bankruptcy (discharge of your debts).  A Chapter 13 bankruptcy creates a court monitored payment plan that gives you three to five years to pay off your debts.  If you are presently considering bankruptcy, I would highly recommend that you discuss the details of your situation with an attorney.  We recommend Pre Paid Legal, which is a program that provides unlimited access to attorneys by phone for about $26 per month in most states.

Helping you make the most of God’s money!

James L. Paris
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