Did you know that exorbitant medical bills are one of the country’s leading causes of bankruptcy? It’s true! More and more people are declaring bankruptcy every year because they were hit with a medical emergency or an inflated bill. It’s so widespread that many rental applications allow you to specify that if you did declare bankruptcy within the last two years it was because of medical bills, not because you were bad with money.
Now, obviously, not every surprise medical bill has or should result in bankruptcy. While it has lost a lot of its stigma, the declaration of bankruptcy is still and should always be a very last resort. Here are some of the steps that you can take to maintain your financial health instead of opting for the worst case scenario.
Work With the Biller
Here is something important: the doctor and the hospital want to get paid. Period. They don’t necessarily care about getting paid 100% immediately. Sure, that’s their best case scenario, but most of these professionals understand that not everybody can hand over a check for five figures at the drop of a hat. Be honest with the billing department about your ability to pay and ask them to help you set up a payment plan. The billing department will almost always be amendable to getting paid a little bit over time if it means the bill will eventually be paid in full.
Sometimes you can “sweeten the deal” by offering to pay a larger lump sum up front and plotting the rest out over a payment plan. Be careful about the loans you choose, though. It is okay to spend a few days figuring out your options. Don’t give in to your panicked urge to apply for every single loan for which you may be eligible! That’s how you get taken advantage of by predatory lenders. If your credit is bad and you can’t find an unsecured personal loan, your best option is going to be an installment loan. According to Maxlend, a web-based installment loan broker, installment loans are superior to other short term loans because you can extend your payments out over as many as twelve months, making the loan easier to repay.
Pay Only What You Have To
Of course, before you set up a payment plan or take out a loan to cover or act as a down payment, make sure you and the medical professionals agree on the amount you owe. Scrutinize your bill and make sure that every charge is legitimate. Challenge everything that looks bogus or questionable. You might want to have an attorney look over the bill to help you negotiate down the final amount. Remember, these bills are coded by humans and humans make mistakes! Get those mistakes sorted before you begin paying.
Dealing With Insurance
Perhaps the most frustrating part of dealing with medical bills is dealing with the insurance companies who will try to wiggle out of paying their share of those bills. Thanks to the Affordable Care Act, your insurance provider can’t decide not to pay based on pre-existing conditions. They have other tricks up their sleeves, though, so, again, working with an attorney to make sure the insurance company doesn’t try to double bill you or stick you with more of the bill than you should be paying, consult an attorney.
Finding the Money
Eventually, once everything is settled and everybody agrees on the amount due and to whom, it will be time to start making payments. This is where you will likely have to get creative with your income and your budget. Go over that budget with a fine toothed comb. Can you cut anything out or trim enough line items back enough to cover your new monthly payments? Can you do that without having to give up your savings plan?
Give yourself some time here. It is normal to feel like you’re already living on a shoestring and there isn’t anything that you can give up and sometimes this is true! It is important, though, to try to be objective. There are literally hundreds of ways that you can reduce household spending. Not all of them are big savers, but if you find enough small savings, they will add up!
If you truly cannot adjust anything in your budget, can you take on a side gig? There are many different gigs that you can take on from home and literally in your spare time. These gigs might not bring in a full time income but you should be able to bring in enough to cover your new monthly payment plan.
Remember: you have options! Bankruptcy is just one of them and should always be your last resort.