Medical Bankruptcy - How to Avoid It
So, you've got thousands of dollars in medical bills even though you have health insurance. Or, maybe you don't have health insurance, so your medical bills are that much higher. Filing bankruptcy, regardless of the reasons, is pretty much the worst thing you can do, though some people have found that a fresh start takes the pressure off, even if they no longer have a bunch of plastic cards in their wallets. Most end up keeping their home and their vehicles by reaffirming with those creditors after the bankruptcy is discharged. But, if you don't want to see your formerly good credit go completely down the tubes for the next 7 to 10 years, there are ways to avoid bankruptcy court.
The first rule is to answer the phone. Basically, everything is negotiable. Start by respecting the fact that the person on the other end of the phone is just trying to do their job. Don't be verbally abusive and don't be rude. You can even tell them that you appreciate their situation, but then be totally honest about yours. Ask if there is any way they can forgive part of the debt and then make a realistic payment plan for the balance. Don't let them force you into charging your debt on a credit card or making monthly payments that you know you can't afford. They would rather get a portion of the debt settled than to lose out on all of it. The same is true regardless if it is the hospital billing office you are dealing with, or a medical collection agency. Normally, it won't have to go to collection if you just talk to the people on the phone. They are "people" too and though they are trying to collect a debt, most have compassion and empathy for you. Communicating with the doctor or the hospital itself can often result in a reduction of a portion of the debt and in some states if you just pay $5.00 a month on an outstanding bill, you are protected to the point that your wages cannot be garnished or a lien put on your property. So, make a plan and communicate that plan to those whom you owe the money to.
Another way to avoid medical bankruptcy is by preplanning. Amazingly, using a hospital or medical provider affiliated with a church can result in much more understanding and sometimes with complete forgiveness of the debt when a patient is experiencing serious financial hardship. The Roman Catholic Church seems to be the most forgiving in this situation.
Some people are attempting to pay bills that should have been covered by their medical insurance. If you are in any way unsure, then go to the person that holds the purse strings, which is usually the benefits administrator in your company's HR department. They will usually go to bat for their employees when dealing with the insurance company and the insurance company has a vested interest in working with them. If a particular company has continual problems with a certain group health insurance, they are liable to take their business elsewhere. Most insurance companies would rather capitulate than risk losing a large client. On the other hand, if you have purchased your insurance on your own, then your ally will be your health insurance agent. He or she is also considered 'important' to an insurance company. If an agent loses faith with a health insurer, all he has to do is not recommend that insurer to his or her clients and the insurer will lose a lot of business. An insurance broker of some kind is definitely preferable to dealing with the insurance company personally. When dealing with an individual they don't run as big a risk and are usually that much more unforgiving and aggressive when it comes to collecting on that debt.
