5 Points to improve financial situation and manage debts in your 40s

When you are in your 40s, it means you are bound to take financial responsibilities, and along with it, you have to take care of improving your financial situation.

So, you can have a look at what you should do in your 40s to improve your financial situation

In your 40s maybe you will give your family more priority than yourself.

So, take a look where you need to improve your financial situation now:

  1. Try to complete repaying your long-term debts quickly.
  2. Think seriously about retirement planning.
  3. Give priority to your monthly personal budget now.
  4. Time to think about extra income avenues.
  5. Talk with a financial planner

In general, you have to take care of these 5 points to improve your financial situation when you are in your 40s. So, let’s discuss these points in detail.

You can have a look now at the 5 specific points on improving the financial situation and managing debts in the 40s.

1. Your focus should be on repaying long-term debts quickly

Most of us have taken out long-term debts like a student loan, home loan, car loan, etc. when we are about to start our career in the 20s and 30s. Now, it is the appropriate time when we are in our 40s to think about paying back the long-term debts quickly.

The benefit of quickly repaying the long-term debts within your 40s is when you will be in your mid-60, then you will have enough money saved for retirement.

2. You should not make any delay to your retirement planning anymore

You are already in your 40s, so do not delay your retirement planning. It is a great way to improve your financial future.

So, if you have the habit of skipping your contribution to the 401(k) account or withdrawing money from your savings suddenly to use it for leisurely expenses, then it is time to change your habit.

You are already in your 40s; so, do not delay your retirement planning anymore. You should take your retirement planning seriously now.

3. You should prioritize your budget now

You should keep track of your spending. You can try to save the receipts so that you can keep a regular check on your spending.

Apart from keeping a track of your spending, you should concentrate on creating personal family budgets now.

If you want to create a personal family budget, then the 50:20:30 budget formula or the cash envelope system may be excellent for you.

Let’s take a look at the family budget system that you can create in a simple way.

A. The 50:20:30 budget formula

The 50:20:30 is the simple budget formula that you can use to make your home budget. The 50:20:30 means 50% of your monthly earnings will be spent on the necessary things like grocery, utility bills, paying off your debts, etc.

Next, we should talk about 20% of your earnings. You should save 20% of your earnings to any savings account or you can invest that amount too.

Now, we should talk about the remaining 30% amount. You are free to spend the money whatever way you would like to spend it. It is the amount you are free to use leisurely. However, you can save a certain portion of it to increase your savings or pay off debt.

This is, in brief, the 50:20:30 budget formula.

B. The cash envelope system

The cash envelope system is a cash-dependent system. You have to create a few envelopes and then you have to write some names on the envelopes.

For example, you should write ‘Utility Bill’ on one of the envelopes, you can write ‘Unsecured Debts’ on the other envelope.

You have to put money in the envelopes and spend it according to your budget. The cash envelope system can be used in a good way with your budget allocation.

This system will never allow you to spend even an extra penny beside what is limited on each of these envelopes.

Thus you can use the 50:20:30 budget formula and the cash envelope system which is very useful to improve your finances when you are in your 40s.

4. You can think about ways to earn extra

In 2021 there are so many extra income avenues, like weekend income, part-time jobs, passive income, etc.; so many options available to you. It will be a mistake if you do not avail any of these options.

Now, take a look at 2 ways how you can earn some extra money.

A. You can invest in REITs

You can invest in the REIT (Real Estate Investment Trust) stocks and you will earn money generated as dividends from the REIT stocks.

For earning passive income, there is no better option than REIT-investment.

B. You can check out several online jobs

In 2021, there is no dearth of jobs you can do online. For example, you can do an online teaching job, online secretary job, online telephone caller job, etc.

These jobs are in high demand now. Other than that you can do freelance jobs like freelance writing, freelance designing, etc.

A part-time job can help you at your age when you have to look after a large family. Other than that you can rent your vacant room, your garage to earn some extra dollars.

Remember, at your age, money is an important matter; so, open all the opportunities for yourself to earn some extra dollars

5. You can talk with a financial advisor now

There is a misconception that a financial advisor or a financial planner only gives you advice regarding your investment. It is a complete misconception.

A session with the financial advisor means you are going to be beneficial for the long term for sure.

A financial advisor can help you in several ways, take a look at them:

A. The expert can chalk out a budget strategy for you

When you are in your 40s then you will have a lot of financial burden on your shoulder. You have to think about your kid’s higher education, the cost of repairing your home, buying a new car, etc. It means you need a long-term goal and a perfect personal budget.

The financial advisor can help you with it.

B. The advisor will help you out with correct retirement strategies

If you want a stable financial condition after your retirement, you need to create an accurate retirement plan. Be it your social security strategy, 401(k) or 403(b), or even your investment portfolio, you can seek advice for every aspect from the financial advisor.

C. You can get an easy solution to tax-planning from the financial advisors

The tax problem is one of the financial problems that grow with time. When you are in your 40s, your wealth must have increased for sure. Apart from your wealth, the other matter that will always be a burden on your mind is the tax problem.

When you need a correct solution to your tax problems you should consult a financial advisor.

These are, in brief, why you should contact a financial advisor and what kind of support you can expect to get from a financial advisor. Apart from these 3 points, a financial advisor can help you with debt management, investment planning, insurance planning, real estate investment, etc.

So, when you are in your 40s and eager to improve your financial condition, without hesitation you can consult a financial advisor.

Final words

Your current age is the correct time to emphasize managing your debts, retirement-related savings, and to fulfill your other wishes. This article is helping you with correct planning and guidance regarding how you can manage your debts and improve your financial situation when you are in your 40s so that any type of financial depression cannot catch you.

How to celebrate Christmas without spending much amidst the pandemic

Like everything else, the upcoming Christmas holidays will also be celebrated in a different way due to the Corona pandemic. Most of us are almost fatigued after a long 9 months of social distancing and lockdown norms, and the upcoming holidays are the ideal time to relax and forget about the horrible last 9 months.

 

But the economic condition of the US and the rest of the world is not in good shape. With millions of job losses, the Christmas holidays and celebrations will not be as enthusiastic as in the past years. But what should I do? If you don’t celebrate Christmas cheerfully, the chances are you may be more depressed than now.

 

So, the best way is for you to celebrate the Christmas holidays by being cautious about your health and your pocket. Take a look at the ways you can enjoy a merrier Christmas, even if you are going through a salary cut or have a debt burden on your shoulder. The best way for you will be to try to keep the Christmas celebration a small and personal affair this year.

 

Take a look at the 5 points on how you can celebrate Christmas in a personal way.

 

1. You can keep this year’s Christmas celebration a purely family affair

 

In 2020, if you can keep the Christmas celebration a purely family affair; it can be good for both you and your family’s health as well as you can save some money. Even if your family is unhappy with your home-Christmas celebration and complain against it, you should remain firm in your decision. Explain why you’re doing so.

 

This year when the job loss rate is so high, hour cut and salary cut has turned into a normal affair, people are expecting for the second stimulus check; keeping Christmas a purely family affair won’t be a bad decision taken by you.

 

2. Keep control of Christmas gift sending custom

 

It is a tradition that we have followed for years. On the occasion of Christmas, it is a custom that we send gifts and receive gifts from our relatives. But this year, you can save your hard-earned money if you break the custom of sending-receiving gifts. You know it, all your relatives know it, the entire country knows it; nobody’s financial condition is stable this year.

 

So, only for this year, you may break the custom of not sending gifts to your relatives and forbid them as well to send you any gift. By breaking the custom this year, you can save yourself from indulging in unnecessary spending.

 

3. Try to celebrate a virtual Christmas this year

 

Usually, the Christmas season means partying with friends, going to your relatives’ houses, going for a beach vacation, and so on. But this year, neither the outside environment is safe nor the financial condition of everyone is good So, better for you will be to convince yourself and your family members to celebrate a virtual Christmas this year. Unnecessary celebration and overspending may bring an extra debt burden on your shoulder.

 

4. You can go for homemade gifts this year

 

This year, everyone aims to celebrate Christmas without overspending, and not getting entangled in the unnecessary debt burden. So, you can go for homemade gifts to celebrate Christmas. Are you thinking homemade gifts are a time-consuming affair? It is not always like that. If you brainstorm some good ideas, homemade gifts can be a way to make your friends and family happy and give them a surprise.

 

The handmade gifts bear a personal touch and can prove to be a pocket-friendly affair this year. So, better than going shopping, and instead of using the online mode, you can present your loved ones homemade gifts. You can present your parents, wife, children, close friends, relatives a homemade jar of pickles, easy-to-make cakes, chocolates, and biscuits as a gift for Christmas.

 

Handmade Christmas cards can be another great Christmas gift idea. So, instead of shopping in big stores, you can search the internet regarding how to make homemade gifts. By opting for this, you can save some money for sure.

 

5. You can try to maximize your savings by using different ways

 

Usually, at Christmas time, all the sellers try to earn maximum profit by doubling the product price. The best option for you will be to check the price of the products before buying them. You can use different shopping apps that will provide you with better ideas from where you can buy products at a cheaper price. Your credit card can also be helpful in your goal of saving money during the Christmas season.

 

For example, a particular store or online website may offer cashback and rewards for a particular credit card. So, instead of using any other credit card, use only the particular credit card that has exclusive offers from that particular store. So, by applying this technique and using specific credit cards, you can earn reward points and cashback from the store.

 

However, don’t be tempted to use your credit card more just because you are getting the offer of cashback and reward points. The best strategy is to use credit cards for a limited portion of purchases and for the rest of the purchases, you can choose the cash payment option. Thus you can save yourself from unnecessary debts due to your over-usage of credit cards.

 

These particular 5 ideas can help you to save yourself from overspending during the Christmas holidays. Now one important point to discuss is what should you do if you are unknowingly falling into a debt trap or you are already in debt and you want to celebrate a merrier Christmas?

 

Read the article furthermore to quench all your curiosities regarding how to tackle the debt during the Christmas holidays. You can choose the credit card debt consolidation option to repay your high-interest rate credit card debts.

 

Take a look at the 2 credit card debt consolidation options that may suit you.

 

1. You can use the Balance Transfer Card

 

What if you have already made a good amount of shopping by using your credit card? What if you are guessing that despite your best efforts, ultimately you will end up with a good amount of credit card bill? You can use a balance transfer card to avoid this situation.

 

It usually comes with an attractive introductory period offer of 6 to 18 months where you can pay off the due credit card balance with a 0% or very low-interest rate. So, you can save a good amount on the interest rate.

 

2. You can opt for the debt management plan

 

If you are already facing the twin problem of a huge credit card outstanding balance and a lower credit score, then you can consult an expert to help you understand the debt management plan. With a debt management plan, your multiple debt payments can be merged into a single monthly payment and your interest rate will be slashed for sure. You can choose the debt management plan and all your tension will be over.

 

So, if you are already going through a debt-burden phase or if you have already guessed that after Christmas there may be a huge debt burden, then the best option is to consult a debt consolidation firm beforehand.

 

Final Words

For some people, the Christmas celebration means doing something extravagant. But you cannot expect the world to run in the same way every year. Even your expensive gifts may not console your close friends, relatives, and family members; the situation is so bad this year. So, the better choice for you will be to check yourself, do not plunge into unnecessary spending, and most important of all is to avoid unnecessary debts.

What is medical debt and how do you deal with it?

What is medical debt?

Medical debt in America is one of the biggest financial issues that is turning the lives of common people into a living hell. Medical bill debt is commonly called the debts which are incurred by people while getting health care and related services.

Medical debt is different from other types of debts because medical services are needed when people become ill or experience an accident or any other health-related emergencies. People do not plan to fall ill or hurt themselves, and they can’t also avoid health care remedies as they need to be cured asap.

People usually avoid talking about their medical debt, as they feel guilty about it. They think that failing to pay off medical debts is a serious matter of one’s life. That’s why they also feel shy to get help with medical debt from others.

Medical debt is a notable factor of the national debt number in the United States. As per a poll from the Pew Research center, medical debt in the US is a top public matter and concern as Americans are truly worried about their health care issues. Research also revealed that in 2020, about 137.1 million Americans experienced financial difficulties or debt due to medical bills.

Check out some important statistics about medical debt:

  • The average age of people who go through a medical bankruptcy is 44.9 years. (American Journal of Medicine, 2009)
  • Among people who experience medical bankruptcy, 46.3% are married. (American Journal of Medicine, 2009)
  • Among people who experienced medical bankruptcy, 60.3% attended college. (American Journal of Medicine, 2009)
  • The average monthly household income of medical bankruptcy filers is $2,586/month. (American Journal of Medicine, 2009)
  • Among families who experience medical bankruptcy, 20.1% are military families. (American Journal of Medicine, 2009)
  • The average debt for households that experience medical bankruptcy is $44,622. (American Journal of Medicine, 2009)
  • About 19.5% of consumer credit reports include one or more medical collections. (Consumer Financial Protection Bureau, 2014)
  • The average unpaid medical debt recorded on credit reports is $579. (Consumer Financial Protection Bureau, 2014)
  • 22% of consumers with debts in the collection have only medical debts. (Consumer Financial Protection Bureau, 2014)
  • 54% of consumers with medical debt have no other debts listed on their credit reports. (Consumer Financial Protection Bureau, 2014)

Data courtesy – singlecare.com

What type of debt is a medical bill?

An unpaid medical bill normally becomes a medical debt. It is another form of unsecured debt, like credit card bills, utility bills, phone bills, etc.

Debt due to medical bills is considered an unsecured debt as it does not have any collateral engaged with it.

It is difficult to avoid medical debt in the first place as it is connected to health-related issues. Health issues can’t be controlled by humans, so they have to opt for medical services if they need to. As a result, medical bills will occur normally. The cost of treating a sudden illness or unexpected operation may create issues to maintain the family budget.

There are few stages through which medical bills become medical debts.

a) Unpaid medical bills

If an individual can’t pay his/her medical bill, the health care provider will try to recover the money directly by contacting the debtor via emails or calls. If the debtor does not respond to the creditor, then the creditor may hire a bill collector.

Nonprofit hospitals and most federally-qualified health centers may need to take a few steps before determining a patient’s eligibility for financial assistance. So, most of the medical debt cases are seen in private hospitals and medical service providers.

b) Bill past due

The healthcare company or hospitals will assume a bill past-due if the patient does not pay the bills entirely or sort out an alternate payment plan with the creditor. On average, hospitals and health care providers may want to recover their medical bills within 90-180 days of billing a patient. To be on the safer side, consumers or patients may opt for multiple solutions to handle medical bill problems.

  • 53% said they worked out a payment plan with their provider.
  • 37% said they borrowed money from friends or family.
  • 34% said they increased their credit card debt.
  • 70% said they would cut back spending on food, clothing, or other basic household items.
  • 41% said they took an extra job or worked more hours.
  • 59% said they used up most or all of their savings.
  • 35% said they have been unable to pay for necessities like food, heat, or housing.

Source: Kaiser Family Foundation / The New York Times, 2016

d) Medical debt in collections

Healthcare providers may hand over unpaid bills to in-house or third-party debt collectors or sell those debts to a debt buyer. Debt buyers normally purchase those medical bill debts with lesser amounts. Debt collectors and debt buyers may contact patients or debtors via phone calls and may charge penalties and interest.

If the patient does not pay the debts at all, the debt collectors or debt buyers may file a lawsuit against them. As a result, the patient or debtor may have to face multiple consequences, such as wage garnishment or personal property seizure.

What happens when you can’t pay medical debts?

“Should I pay a medical debt?”

You might be thinking about this if you have a big load of medical bills on your head. But apparently, the answer should be big…yes! If you can arrange money to pay off medical debt, then you should actively pay it off as soon as possible.

But if you are seriously suffering from a low funding issue or facing financial hardship, it can impact your ability to pay off medical debt. If you have received a bill and are thinking about skipping the payment, here’s what you can expect:

a) Late fees will be charged

If you skip your medical bill debt payment, you’ll make it more costly for you. Missing the due date of your debts can be expensive as it will add late fees or interest with the original debt. As a result, your debt will be bigger. Most of the medical debt in America is increasing due to this particular reason…missing the due date!

Depending on your state’s law, you might avoid penalty fees. In a few states, medical service providers can’t charge late fees if you skip the due date. Minnesota, California, New York, and Illinois are states where late fees on medical bills are banned.

b) You’ll encounter a hired collection agency

If you do not make payments on medical bills for a long time, the service provider might hire a professional debt collector for medical debt collection. In the case of debts like credit cards, the creditor sends the account to collections after six to nine months.

But healthcare service providers normally send unpaid medical bills to the collection department asap.

In most cases, a debt collection agency will contact you if you’re more than three months past the payment due date.

It is quite difficult to handle debt collectors than the original creditor. The creditor will easily agree to negotiate with you regarding the medical debt settlement. You may even get a great offer from the original creditor. But once the medical debt collection process is initiated, the collection agency won’t be so soft on you. They might try to harass you, scare you, make your life awful, even in your workplace.

You shouldn’t avoid their calls and ignore your debt if it is genuinely yours. If you do, it will make you fall into legal traps and the situation may become worse for you.

c) Legal action can be taken against you

The longer you take to pay off medical debt or arrange a settlement option, the more difficult your situation will be. The debt collection agency may take legal action against you if you do not pay the debt.

Initially, your medical service provider can sue you for unpaid medical debt. The court may give you a severe punishment called wage garnishment.

The court will issue an order to your employer (if you do a job) that a certain amount of money from your income will be garnished and given to the creditor regularly until the debt is settled. In the case of medical debt in the US, Americans who are earning between $25,000 to $45,000, on average 5% of them are affected by wage garnishment. If you want to get help with medical debt, then you should act fast and contact the creditor before they file a legal action against you.

You must remember that a collection agency won’t be so generous to you, and they probably can sue you if you do not entertain their collection efforts.

Since medical debt is considered a civil debt, you cannot be sent to jail for it. However, if a wage garnishment is ordered against you and you ignore the court order, then you can be put behind bars for sure.

d) Your credit score will be affected

Does medical debt affect your credit? Of course, it does!

The three credit bureaus – Experian, Equifax, and TransUnion have amended their rules on medical debt collection. In 2016, they released the National Consumer Assistance Plan, which is targeted to help consumers against unfair credit reporting practices.

If you are facing medical debt collection, you have 180 days before the credit bureaus report it as past due. It also gives you time to repay the debt within that allotted time before the account will appear on your credit report.

If you can’t pay off the bill, be sure to see the addition of medical debt on the credit report. As a result, it will immediately affect your credit score. But even if a medical debt collection does get reported, it won’t harm your credit score too badly.

According to the newer credit scoring models, both FICO 9 and VantageScore 4.0 consider medical debt as a less “weight” debt, compared to other debts such as credit card bills or payday loans. So, medical debt won’t negatively affect your score as badly as other collection accounts.

Will medical debt go away?

Once added to your credit report, it will take 7 long years to dissolve.

Medical debts will be removed naturally once you pay them off or are being paid for by your insurance coverage. Unpaid medical debt in collections will still affect your credit report for those 7 years from the original delinquency date.

But is it that simple to get out of medical debts after 7 years? No.

Your unpaid medical bills will be removed from the credit report after 7 years. So, you won’t face a problem while applying for a new credit card, a loan, a job, or buying a home.

But you’ll still be responsible for the medical bill debt.

To get out of this situation, you should pay off all the medical debts, or arrange an alternate repayment plan. You can enroll in a medical debt consolidation program or settle the debt through a medical debt settlement option.

How can you deal with medical debt?

Like any other debt issue, you also might be thinking about how to get rid of medical debt easily. But practically, the thing is not so difficult if you follow some simple ways.

If you are being contacted by a collection agency, you have the right to ask for a written confirmation of the debt (debt validation) as well you can dispute it.

Under the federal Fair Debt Collection Practices Act and the federal Fair Credit Reporting Act, you own the right to dispute inaccurate information on your credit reports.

Check out some best ways to deal with medical debt:

    • Do not ignore the debts if you owe them – Do not avoid paying off medical debt if you can afford it. Ask your provider for all the details about healthcare service costs before you opt for one. Once you receive the service, you should communicate with your insurance provider. You must check whether or not you are eligible for coverage of that medical service.

    • Always ask for debt validation – Whether it is a medical service provider or a collection agency, once you get a billing statement, you should always ask for debt validation from that party. You have the right to get that information. If you are your creditor, request a written, detailed bill to ensure that they are charging you for the services you receive. If it is a collection agency, make sure the debt is yours.

    • Compare medical bills to insurance EOBs – Your insurance explanation of benefits or EOB will break down each medical charge for you. An EOB is a statement included in your health insurance plan explaining the details about the costs covered for the medical services you received. The EOB will be generated when your medical service provider submits a bill for the services you received. An EOB should inform you about how much the provider charged you in total, how much the insurance will cover/disallow, and how much you owe to the creditor.

    • Don’t use credit cards to make payments – You might be interested to pay off medical debt by using your credit cards and get your medical service provider off your back. But beware! You should never choose credit cards as an option as by doing so you will be converting your medical debts into high-interest credit card debts. If you can’t pay the credit card bills somehow, then it will hurt your credit score much more.

    • Negotiate for an interest-free payment option – Don’t wait to negotiate your bill until it is delinquent or in collections. If you do so, at that point your credit score will be seriously damaged. So, negotiate as soon as possible. You can have interest-free payment plan benefits if you can find it written in the fine print on the medical bill statement. Don’t be afraid to negotiate with the service provider and initiate the monthly payment option. Make sure you have written documents as proof of this. That way, if they report a negative item on your credit report, you can dispute it by showing the agreement and prove that you are doing everything lawfully. If you are paying through a lump sum amount, don’t forget to ask for a prompt pay discount.

    • Ask others to provide help with medical debt – If you have financial hardships and can’t afford to pay medical bills, you may ask for financial help from your family, friends, or any other person who is close to you. But make sure you return their money whenever you have the funds available to you.

    • Seeking professional help – The medical service provider or collection agency may ignore your negotiation request and may not cooperate with you. But you have to get a suitable alternate payment plan, considering your budget. For this reason, you may hire a professional medical billing advocate or claims assistance specialist to get help with this issue.

      Apart from legal support, you may also seek medical debt relief from non-profit organizations. But before that, you should try to get out of this issue all by yourself. You may try some DIY methods such as budgeting, money-saving tips, doing side hustles, and withdrawing funds from investments or from retirement accounts, etc. Make sure you refill all the money taken from your investments whenever possible.

      Next, pay off your medical debt with ease, and also keep your credit score intact by opting for a medical debt consolidation option. This way you may consolidate all of your medical bills into one single monthly payment. By doing so, you will pay off your debts entirely and your credit score will be safe and untouched.

      In most cases when people face a medical debt collection process, professionals would recommend them to settle that debt asap. If you want to keep yourself away from debt collectors and also want to settle your medical bill debt into a lower value, choose the medical debt settlement option. But remember, settling your debts will have a negative impact on your credit score.

    • Seek federal help– Get help from the government with medical bills and insurance options. As per usa.gov, some programs may help you get support in medical debt:

      Medicaid and the Children’s Health Insurance Program (CHIP) provide help with paying medical costs for children of families who cannot afford health insurance or don’t get it through their work.

      Local Social Security Administration (SSA) offices help those on Social Security and Medicare find help. People over 65, people with disabilities under 65, and people with end-stage kidney disease are eligible for Medicare.

      You may qualify for Medicaid, a joint federal and state program that helps with medical costs for some people with limited income from the Centers for Medicare and Medicaid Services (CMS). Each state has different rules about eligibility and applying for Medicaid for adults. Each state has different application requirements for Medicaid for adults. Call your state’s Medicaid program to see if you qualify and learn how to apply.

      HealthCare.gov helps you find insurance options, compare care, learn about preventive services, and more. If your employer does not offer insurance, you are self-employed, or you prefer to purchase your insurance, you and your family can get health, dental, and vision insurance through the Health Insurance Marketplace. Everyone is eligible for health insurance through the Marketplace. You may also qualify for subsidies to help pay your premiums. 2019 Open Enrollment runs from November 1, 2018, to December 15, 2018. If you’ve experienced certain life changes, like the loss of a job or childbirth, you may be eligible to make changes to your health insurance during a Special Enrollment Period. How you apply for a plan in the Health Insurance Marketplace depends on what plan you choose. Visit the Health Insurance Marketplace’s top questions section for additional help with finding or applying for health care. To file a complaint, call 1-800-318-2596 (TTY: 1-855-889-4325).

      Data courtesy – usa.gov

  • File bankruptcy of your medical bills if needed, any of the above-mentioned options do not work for you, and you may choose to file for bankruptcy as the final medical debt relief option.
    Medical debts might be discharged in bankruptcy, but professionals would suggest not to choose a medical bankruptcy in the first place. Bankruptcy will damage your credit and make it difficult to qualify for any consumer debt in the future.Bankruptcies will stay on your credit report for 3 more years than a medical debt on the credit report. So, it is better to talk to an attorney and get help with medical debt, if you are thinking of bankruptcy as a way to get rid of old medical bills.

Can medical debt be forgiven?

Many people like you are also looking for an answer to this question. As per a 2016 Kaiser Family Foundation survey, nearly 26% of American citizens are having critical issues paying their medical bills.

The perfect and safe way to get medical bill debt forgiveness is to contact your medical health provider or the hospital’s billing department. Talk to them and get information on how to qualify for any medical debt relief programs such as “financial aids” or get discounts on your medical bills.

Medical health providers often communicate with patients who can’t afford high medical bills. So, they also sometimes offer a variety of options to reduce medical costs for the patients and also provide information on how to apply for medical debt help. The eligibility criteria of these programs are solely determined by the hospitals or medical service providers.

Some programs they offer are:

  • Provide financial assistance to patients who do not have sufficient insurance coverage or any medical insurance at all.
  • Offer discounts to pay upfront medical bills.
  • Initiate interest-free payment plans for patients who can afford monthly payments.

As per the federal laws, governed by the National Consumer Law Center, half of all states have strict rules regarding what kind of financial assistance a hospital needs to offer to their patients. The rules may vary according to the state, but most of them indicate that hospitals should give financial support such as free or reduced-cost medical care, or an interest-free payment plan. Patients with income below the federal poverty level (FPL) or those who are uninsured will receive such medical support at a low cost.

6 states which provide lower-cost medical care based on a four-person household under the medical bill’s debt forgiveness program:

Washington New York California Connecticut Colorado Maryland
Free care for uninsured patients at or below 100% FPL.
Discounted care for patients between 100% and 200% FPL.
No more than a nominal fee charged to patients who are at or below 100% FPL.
Discounted care for patients between 100% and 300% FPL.
Free or discounted care for patients at or below 350% FPL (now $91,700). Free or discounted care for uninsured patients who do not qualify for Medicaid, Medicare, or other coverage, and who are at or below 250% FPL. Discounted care for uninsured patients at or below 250% FPL ($65,500). Free care for patients at or below 200% FPL ($52,400).
Discounted care for patients between 200% and 300% FPL ($78,600).

Conclusion

I hope all of your queries on debt due to medical bills are answered above. Medical bills might look less expensive than other high-interest debts such as credit card bills or payday loans, but it can harm your finances and credit a serious level of damage, which may take several years to restore. So, be prepared and well informed. Best of luck!