$40,000 Medical Debt - What to do?

[danstelter]

So I'm good with money, but my wife had quite a few medical problems and we had crappy insurance (got good stuff now), and we have this medical debt to pay off.

We have some really big bills, and some small ones. My question:

Should I start to try to settle the big ones first, as creditors would sue us (we live in WI) for those first?

Also, what happens if we get sued? Can we negotiate from there? We own a house, and I've heard if you don't pay, they slap liens on your home? Can those be negotiated?

I want to settle all this and pay it down, but not sure how to strategize all of that. I'm self-employed so income is unpredictable (but generally going up this year and anticipate it will continue overall), so that's another factor too.

Thanks for your opinions,

Dan

[hamchan]

There will be no negotiating once they sue you, because they have you over a barrel at that point. Are they currently in collections? Are they threatening to sue?

[AnotherReader]

Where you are in the process does matter, because of your credit. Keeping these accounts out of collections if possible is best.

In your shoes, I would call the business office of each provider and tell them you do not have the money to pay all these bills. Tell them you need some help with the total bill and a payment plan, because the $40k total of all the bills is far more than you can pay. They may offer you a minimal reduction at first. Ask them to have another look at the bill to see if they can give you some additional relief and a better payment plan. Once you get one of these settled, move on to the next one. Keep using the $40k total and don't mention the settlements you are getting from other providers.

If someone balks and says no, move on. Settle everything else and then go back to the short list of folks that won't play the game. For small amounts, you may just want to pay them. If any providers that issued large bills balk, up the ante. Tell them you are considering filing bankruptcy but you would prefer to work with them. They may refuse, but most medical providers are actually helpful if you really can't pay the bill.

If you have a $20k bill with a hospital or other provider and they refuse to work with you, then you have a problem. Being sent to collections could actually improve your chances to settle, but it's not pleasant. If you truly cannot pay the bill and are technically bankrupt, it may be worth paying a small retainer to a bankruptcy attorney and let them deal with the collector. Retaining a bankruptcy attorney almost always keeps collectors from filing for a judgement. Why spend the money to file if the judgement will be vacated by the bankruptcy court? The object is not to file bankruptcy, but to bring the creditor to the negotiating table as you work your way through the pile of bills.

Many people are in your position with huge medical bills. Most medical providers are prepared to work with you in one way or another. If you are proactive, pleasant, and honest with the business offices, you should come out with a reasonable plan to resolve the bills and a lot less stress.

[Kundan Lal Rana]

Negotiating could be quite difficult in the case if they are not listening you. But you should try to convince them for the help with the payment plan and the total carried bill. May be you can get the some relief in the bills. Good Luck!

[hamchan]

Where you are in the process does matter, because of your credit. Keeping these accounts out of collections if possible is best.

In your shoes, I would call the business office of each provider and tell them you do not have the money to pay all these bills. Tell them you need some help with the total bill and a payment plan, because the $40k total of all the bills is far more than you can pay. They may offer you a minimal reduction at first. Ask them to have another look at the bill to see if they can give you some additional relief and a better payment plan. Once you get one of these settled, move on to the next one. Keep using the $40k total and don't mention the settlements you are getting from other providers.

If someone balks and says no, move on. Settle everything else and then go back to the short list of folks that won't play the game. For small amounts, you may just want to pay them. If any providers that issued large bills balk, up the ante. Tell them you are considering filing bankruptcy but you would prefer to work with them. They may refuse, but most medical providers are actually helpful if you really can't pay the bill.

If you have a $20k bill with a hospital or other provider and they refuse to work with you, then you have a problem. Being sent to collections could actually improve your chances to settle, but it's not pleasant. If you truly cannot pay the bill and are technically bankrupt, it may be worth paying a small retainer to a bankruptcy attorney and let them deal with the collector. Retaining a bankruptcy attorney almost always keeps collectors from filing for a judgement. Why spend the money to file if the judgement will be vacated by the bankruptcy court? The object is not to file bankruptcy, but to bring the creditor to the negotiating table as you work your way through the pile of bills.

Many people are in your position with huge medical bills. Most medical providers are prepared to work with you in one way or another. If you are proactive, pleasant, and honest with the business offices, you should come out with a reasonable plan to resolve the bills and a lot less stress.

This is all very very good advice, and I just wanted to add that sometimes depending on the situation a bankruptcy is the absolute best thing you can do. In many situations there are virtually no downsides to doing so, but every situation varies, and state laws vary. If I were in your shoes I'd get together your bills and your income info and schedule a free consult with a bankruptcy attorney. They can tell you whether or not it will be your best move, and if not, help you strategize.