Choose The Best Solution When Medical Debt Changes Financial Situation

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Maintaining your health these days is not easy and involves a lot of money. Whether you maintain a healthy diet or visit the gym on a regular basis, it will cost you money. Add to that the regular visits to the doctor for medical checkup, which you should ideally never ignore, will increase your monthly allocation towards health not to mention about health insurance premiums separately.

With that said, if you have to undergo any treatment it will change your financial situation drastically and often will go out of your control. As you may know cost of treatment now is stupendous and most people have to rely on loans from different sources just to foot their medical bill. In such a situation, you may find yourself surrounded with debts of all kinds and not only for your health.

Finding your debt and finance management difficult, you may look for easy and effective ways to get rid of your debts. There are lots of ways in which you can do that. You can either transform all your debts into one single large debt and continue paying it off every month, a process called debt consolidation, or negotiate with your creditors to reduce you outstanding debt amount and pay it off with a lump sum some time later or as per the new repayment agreement, a process called debt settlement.

You may also consider declaring yourself bankrupt, a process in which you pay as much as you can or not pay anything at all, depending on the type of bankruptcy you file for. Whatever it is, the final choice is up to you and your financial condition.

Remember that every process will have its characteristic pros and cons such as:

  • In debt consolidation you pay the full amount due but with lowered monthly payments with reduced rate of interest
  • In debt settlement a portion of your debt is forgiven but it will affect your credit score negatively and the amount forgiven will be considered as taxable as well by the Internal Revenue Service and
  • Bankruptcy will affect your borrowing power as this negative will reflect in your credit history for about a decade.

Therefore, the process you choose should be the wisest one and for this reason you are asked to consult with a reputed and reliable debt advisor for expert suggestions and opinions. You may also visit reliable sites such as to know more about such debt relief programs and choose the one that suits you and fits in well within your financial situation.

Knowing about bankruptcy

In desperate situations people often take desperate measures thinking it to be the fittest at that time and filing bankruptcy is one such desperate measure in difficult financial situations. This is a legal program that will allow you to cancel your debts through Chapter 7 or Chapter 13 bankruptcy.

The advantages of bankruptcy include:

  • Collection calls will stop almost automatically
  • The bankruptcy trustee will negotiate and reduce the debt amount and
  • It postpones judgment and foreclosure.

However, on the flip side the downsides of bankruptcy include:

  • All your non-exempt properties will be liquidated
  • It will stay in your credit report for 10 years thereby making it difficult to get any loans in future.

Ideally, bankruptcy is most suitable for those people who are ready to discharge their assets and liquidate them to pay off their debts and face an uncertain future.

Choosing debt relief

Therefore, the best way is to look for other alternatives first and then choose bankruptcy as your last and final straw. Looking for other alternatives will restore your health as well as that of your finance of course in the long run as nothing will happen overnight. The debt thing to do to deal with your medical debts proficiently is to choose the best debt relief programs for yourself.

However, the fact that there are lots of different types of debt relief options available to you and there are lots of debt relief companies out there to render their service, choosing the best and the most suitable one for you and your financial condition can be really overwhelming. For this you will first have to find out these six things mentioned hereunder:

  • Know about the debt relief first
  • Read the reviews of debt relief services first to know more about them
  • Search on the internet on how to get debt relief
  • Analyze the results so that you get more familiar with all the debt relief programs available
  • Make a list and compare them all for better and more precise analysis of all the relief programs and
  • Dedicate enough time to think, evaluate and then join a particular program.

The best way to choose the best debt relief program is to know about it and compare it with your current financial situation. Then you should choose the best available solution when the financial situation changes. It is also recommended that you ask a few common questions. A few of these questions may include:

How the programs will affect your credit: It depends on the program you select but in the end it is all about the utilization ratio.

  • What is a hardship assistance program: This is basically the loss mitigation effort of the banks to collect debts if you fall behind your payments due to financial hardship such as prolonged illness or job loss. Here a new repayment plan is created as per your affordability to make it easier for you to make payments.
  • What happens in these programs: Usually, all these programs lower the interest rate and may reduce fees to lower the minimum payment amount. It is actually an effort to reduce their loss margin.
  • Length of a program: It will once again depend on the specific program that you choose because some may last for 6 months, some for a year and a few may even last permanently till you pay off the balance.

It is also required that you know the cost of each program as it will vary extensively depending on the type of program you choose.

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