Newlyweds: 5 Money Matters For A Recession-Era Marriage

Stephanie Christensen, provided by

Monday, June 27, 2011

You made it through the wedding planning and budgeting process, and started your life as a married couple. But have you decided as a couple how will you handle your finances? (Marriage can be like doubling an income, as long as you avoid doubling these expenses. Check out Marriage: For Richer Or Poorer?)
Handled improperly, marriage and unaddressed money issues can wreak havoc on a relationship. In 2009, The New York Times reported the findings of a Utah State University study which indicated that "couples who reported disagreeing about finance once a week were over 30 percent more likely to get divorced than couples who reported disagreeing about finances a few times a month."

The best way to avoid financial disagreements with your new spouse is to address challenges openly, have a shared plan of action, and to understand how credit and the financial system works. Maxine Sweet, vice president of public education for Experian and Wedding Planning Expert Kimberly Schlegel Whitman offer their expert advice for the top five money matters facing recession-era newlyweds.

1. Fight the Newlywed Homeowner Fantasy

Though you're starting a new life as a married couple, one's financial past does not go away so easily. Particularly if one spouse owns real estate that has lost significant value in the housing downturn, it's important to be realistic and plan for your new financial life together, with a broad vision on the long-term. If you're swept away by the fantasy that a newly married couple should purchase a home together to begin a new life, it's time for a reality check. Schlegel advises couples that own a home they can't sell to consider staying in the existing home until the market improves. If you're itching to buy housing right after marriage, consider renting as a temporary option to build savings and a solid financial foundation. Agree as a couple how long you will stay there, and how you will start saving and building your assets for home buying in the future. "The most important thing is to protect your credit history, so that when you are positioned to be able to buy a new home together, you can get approved, and at the best interest rate," says Schlegel.

2. Save for Worst-Case Scenarios

While the economy is making a slow recovery, job security is still wavering in many industries. Though double income may leave you feeling like money is pouring in, Schlegel advises married couples to have savings amounting to at least six months (preferably nine) of your total monthly income as a couple, in the event that one spouse loses a job, or some other disaster strikes. Choose an interest-bearing savings account together, and establish an automatic savings plan (ASP), so that a portion of each spouse's paycheck is deposited to the account regularly. Destroy the ATM card so there is no temptation to dip into the funds.

3. My Debt, Your Debt

While joining finances can be a "rite of married passage" for couples, Sweet urges newlyweds to remember that as a married couple, you are both responsible for debt incurred on a joint account. If you decide to consolidate finances, joint accounts will be reported on each of your individual credit reports, and both spouses are financially responsible for any debt incurred. Likewise, a missed payment will negatively impact both of your credit scores and histories. If you live in a "joint property state," which are predominantly located in the Western part of the United States, Sweet reminds that both spouses are held liable for debt, even if your name is not on the account.

4. Maintain Your Individuality

While financial planning should be a joint activity after marriage, Sweet also recommends keeping at least one individual account in each spouse's name open. This approach will ensure that each individual has easy access to credit in case of an emergency. If you do find yourself facing divorce one day, having an established account in your name will also help you rebuild your individual credit history. (Does signing a prenuptial agreement put your marriage on shaky ground, or is it just smart planning? See Marriage, Divorce And The Dotted Line.)

5. Understand Credit as a Married Couple

In today's tightened lending environment, credit is more important than ever. Sweet reminds that while each spouse will always have an individual credit history, even after marriage. Lenders will often consider both of your financial standings when you apply for credit jointly, especially for major purchases like a car or home. Missing just one payment on one of your individual accounts, could impact your future ability to open joint accounts.

The Bottom Line

Money and marriage can be a challenging and stressful issue for many. For recession-era newlyweds, the unique circumstances presented in an economic downturn make sound financial planning as spouses even more critical. Use these five steps as a guide to pave the way for your new job as joint money-managers, and ensure that you'll start your new financial life as a married couple on the right foot. (Strengthen your marriage by discussing these financial pitfalls. Refer to Top 6 Marriage-Killing Money Issues.)

Original story - Newlyweds: 5 Money Matters For A Recession-Era Marriage

Copyright (c) 2011 Investopedia US. All rights reserved. Investopedia.com is a division of ValueClick, Inc.

Important facts about bankruptcy

by Jamie Billings


Bankruptcy is a tough road that best reserved for those who do not have any other options. Generally speaking, filing a Bankruptcy is a last resort. While it should not be entered into lightly, it may prove itself to be a positive solution for you. If you cannot pay your debts or you are dealing with a lawsuit bankruptcy maybe an option for you. Bankruptcy is an option when you have little or no income in order to make any kind of monthly payment to your creditors. The court will take away from you the responsibility of paying your debts. Bankruptcy usually lasts 12 months, after which time, any unpaid debt is written off.

One of the major aims of bankruptcy law is to give a financially distressed person an opportunity to make a new financial start. Bankruptcy laws help people who can no longer pay their creditors get a fresh start through liquidating assets to pay their debts or by creating a repayment plan. It also protects troubled businesses and provides for orderly distributions to business creditors through reorganization or liquidation.

Bankruptcy is an important decision and the law and it application to one's particular situation can be very complicated. It is generally recommend that one consult with an attorney with experience in the personal bankruptcy field.

If you feel comfortable with attempting the bankruptcy process without an attorney there are several online bankruptcy services and information that may assist you. Bankruptcy information provides an expert advice and a live forum alongside a regular roundup of the latest news, statistics, and research from the world of debt solutions. You may also find reports on issues surrounding bankruptcies.

If you are deeming for a bankruptcy help, you should first understand the different consequences of bankruptcy so you will then be able to make informed decisions about the alternatives available to you. You can also try and come to an informal repayment arrangement with your creditors you can consider a formal arrangement.

There are a number of factors to consider in deciding whether bankruptcy is an appropriate option. You may wish to consult an attorney before proceeding to file for bankruptcy.

Bankruptcy laws help people who can no longer pay their creditors get a fresh start through liquidating assets to pay their debts or by making a repayment plan. Bankruptcy laws also guard troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation.

Bankruptcy will really give you a fresh start. However, careful consideration should be given before filing for bankruptcy, because doing so may affect your credit and like any ordinary phenomena, it have other consequences.

Source

Five Steps to Take When a Collector Comes Calling for a Debt You Don’t Owe

Debthelper.com = A+

If a debt collector is contacting you about a debt you know you don’t owe, explaining your case can be an uphill battle. Whether it’s a matter of mistaken identity, an honest error or identity theft, the Better Business Bureau recommends taking five steps to fight back against erroneous debt collectors.


According to a 2010 report, the FTC received 119,364 complaints about third-party and in-house debt collectors last year, up from 104,766 in 2008. While complaints can be about any number of issues, trying to collect on a debt the consumer doesn’t owe is common. In a recent example, the FTC reached a million-dollar settlement with Credit Bureau Collection Services over accusations that the collection agency violated federal law by inaccurately reporting credit information and pressing consumers to pay debts they often did not owe.

“It can be an exhausting process to set the record straight on a debt you don’t actually owe,” said Alison Southwick, BBB spokesperson. “Because debts are often sold and resold to many different collection agencies over time, you may have to make the same case every few years when the debt trades hands again.”

If you’re receiving calls for a debt you don’t owe, it could be a case of mistaken identity. Perhaps you share the same name, or even inherited an old phone number of the person who actually owes the debt.

You could also be the victim of zombie debt—it could be that you paid the original debt off but it wasn’t recorded as paid, or the statute of limitations on the debt has expired and the debt collector is trying to get you to pay for a debt you can no longer be taken to court over.

A final common cause of being hounded for a debt you don’t owe is fraud. It could be that you have become a victim of identity theft and someone is opening up new lines of credit or buying items using your good name. Additionally, the “debt collector” calling could actually be an identity thief who is trying to get you to divulge personal financial information such as Social Security, bank and credit card numbers.

If you’re being pursued for a debt you don’t think you owe, BBB recommends taking the following five steps:

1. Request written proof of the debt. By law, a debt collection agency must provide you with a validation notice within five days of contacting you about the debt. If you would like to get verification of the debt, send a written request to the debt collector within 30 days after you receive the validation notice. This written proof can help you determine if the callers are actually identity thieves, or if you really do owe the debt. Once you have the name and contact information for the agency, confirm they are a legitimate debt collector with your BBB at www.bbb.org. After you confirm that you don’t owe the debt, advise the debt collector you do not owe the debt and advise them to stop contacting you (see step 4).

2. Correct any errors. After confirming you do not owe the debt, you may want to correct any incorrect submission related to the debt captured on your credit report. Contact the company that has provided the information to the reporting bureau by writing a detailed letter and include copies of pertinent documents which back your case. The FTC provides additional information on how to report errors at www.ftc.gov.

3. Weed out fraud and errors. Check your credit report with the three major credit reporting bureaus, Experian, Equifax and Transunion every year by visiting www.annualcreditreport.com. If you’ve been the victim of fraud or identity theft, you may also be eligible to view your reports for free. By keeping a close eye on your credit reports, you’ll be able to more quickly identify fraudulent activity or mistakes and make corrections before the debt collector calls.

4. Tell them to stop contacting you. According to federal law, a debt collector cannot continue to contact you—at work or home—if you tell them to stop. After confirming you do not owe the debt in question, you may cease all contact from the debt collection company by sending a letter (via certified mail) to the debt collector advising them to cease contact. Keep a copy of the letter and the return receipt for verification purposes. Any further contact to you from the debt collector except to advise you there will be no further contact, or to inform you that the agency is filing legal action, is a violation of the FDCPA.

5. File a complaint with the Federal Trade Commission. Familiarize yourself with the consumer protections provided under the Fair Debt Collection Practices Act. Included are rules that debt collectors may not make false or deceptive claims and must investigate the validity of a dispute over a debt. If a debt collector violates the law, report them to the FTC—the federal government’s agency overseeing fair debt collection practices. You should also file a complaint with your BBB at www.bbb.org.

Source

You're eligible for Chapter 7 bankruptcy, but should you file?

Dear Opening Credits,


My husband and I have accumulated a lot of credit card debt, due to his layoff from a good job and extended unemployment/underemployment. We consulted with an attorney, and it looks like we can do Chapter 7 bankruptcy. We're trying to look at other options, but we're not sure what are legitimate and what are not. Also, we have a lot of pause about a bankruptcy and its effects on our lives for the next 10 years. I'm also concerned about a bad credit report. (Our credit was very good before all this happened.) Thank you. -- Laura

Dear Laura,

Are you familiar with the snappy little adage, "Just because you can doesn't mean you should"? It applies well to bankruptcy. Many people are able to file, but a good portion would actually be better off taking a different course of action. While your attorney said it is a viable option for you, you're right to question whether the legal route is the best road to travel. The person you spoke with likely didn't cover the myriad ways to deal with the debt.

Chapter 7 bankruptcy has equal parts wonderful upsides and rotten downsides. Indeed, it can be a great way to jump-start a new financial beginning. With it, you can walk away from those credit card balances -- well, at least those that weren't incurred for high-dollar cash advances or luxury goods within 60 to 90 days of filing. Those types of purchases might draw the creditor's attention, prompting them to ask that those debts not get discharged.

You don't say how much you owe, but I'll assume it's so much that you're struggling to meet your payments. If you've been late a few times, the interest rates on those accounts will have soared. They could be so high that nearly all of your minimum payment is going toward finance charges. Therefore, each month is the same: You struggle, scrape up as much cash as you can, neglect and even fall behind on vital expenses but get nowhere with that balance.

It seems like a horrible waste, doesn't it? Just think about how you would feel if you could get rid of that debt in bankruptcy. You would be able to use that money you were sending your creditors to pay for living expenses and non-dischargeable bills, and you might even be able to add some into a savings account. That's what people mean when they say it's a fresh start.

Before you get the wrong idea that I'm pushing you toward bankruptcy, know that I am not. If your husband will likely be working again within the next year, I would far prefer that you go on a creditor's hardship plan (assuming it was open to you) where you ask that they suspend payments and maybe even interest and fees for a while. When paychecks start flowing in again, you can get back on track. The fact is, you borrowed that money and ought to repay it if you can.

Other downsides to consider: The bankruptcy notation will remain on your credit report for a total of 10 years. That's a long time for such a black mark to follow you. Back when I was counseling, I used to have my clients picture themselves 10 years older, so a 37-year-old would have to envision herself at 47. Look at it in that kind of mirror and the gravity of a decade is apparent. As for your score, bankruptcy will take it down from where it is now to the very bottom, and it will languish there for a while. Regarding future job prospects, employers aren't privy to your score, but they can see your report --- and thus the bankruptcy. While they are not permitted to discriminate against job applicants who've filed, such a allegation would be virtually impossible for you to prove.

More, if you wanted to finance something during this time -- be it a home, car or new TV -- you would probably be charged a dreadfully high rate of interest. Have valuable property? You may have to give some of it up.

To really help you decide, please visit an accredited credit counseling agency. They will be able to give you a thorough rundown on all of your options, and that may or may not include bankruptcy. For example, a debt management plan could work well for you. Contrary to popular lore, repaying debt on such a program typically boosts a credit rating because it enables participants to resume steady payments.

So should you file, Laura? Perhaps, but only after exploring all other options first.


Source

America's new debtor prison: Jail time being given to those who owe

Debtors prisons were federally abolished in the United States in the 1800's, yet in certain states, they seem to be making a comeback. Out of Minnesota come disturbing reports of Americans being thrown in jail due to outstanding bills -- sometimes for as little as $85. The Star-Tribune of Minneapolis profiles a number of people who say their debts got them jailed, including Joy Uhlmeyer a 57-year-old patient care advocate who was pulled over on her way home from visiting her elderly mother and put in jail for a night for missing a court hearing about unpaid debt.

The Star-Tribune reviewed the state's court documents and found that arrests like Uhlmeyer's are up 60% in Minnesota over the past four years. And Minnesota isn't the only state where this is happening. It's a turn of events Ed Mierzwinski, consumer program director at advocacy group U.S. Public Interest Research Groups (or PIRG), calls a "very bad situation for consumers." Mierzwinski attributes the practice to "bottom-feeder debt collectors [who] are very aggressive."

People who are imprisoned for their debts are technically locked up for contempt of court after failing to appear for a hearing pertaining to their debt. It's a legal loophole that debt-collection companies are increasingly using. Here's how it works: First, the collections company files a lawsuit against the debtor, which requires them to appear in court. If the debtor doesn't show up, the creditor wins a default judgment against them. This allows them to ask the court to schedule another hearing at which the judge can go through the debtor's assets and determine if actions such as wage garnishments or bank account seizures can take place.

If the debtor doesn't show up to that hearing, the hammer of justice can come down hard and fast. From there, the judge can order the debtor in contempt of court and issue a warrant for their arrest. If this seems unnecessarily punitive, the price to get out of jail is even more so, say consumer advocates: Generally, the judge sets the cost of bail at the amount of the disputed debt, an amount which is then turned over to the creditor.

"This is the private use of government resources to collect debt," Pete Barry, partner at law firm Barry & Slade LLC, told Walletpop. One of Barry's clients was arrested at her workplace for not filling out and sending back a form demanded by the creditor. The client, Barry says, suffered the humiliation of having to have her boss come to the jail and post a bond before she could be released. The bond money, he added, was turned over to the creditor. "They're using the court system as their collection agent," he says.

"There are big issues," says Ira Rhinegold, executive director of the National Association of Consumer Advocates. "Minnesota isn't the only place it's happening, but it seems to be the worst. They're leading the way," he says, noting that NACA has heard similar stories out of Wisconsin, New Jersey, Arkansas and Washington.

Rhinegold tells Walletpop that some unscrupulous debt collectors never even send debtors the required notification that the case is being taken to court. Then the debtor fails to show up and the collector wins a default judgment, which can pave the way for imprisonment until they post their bond.

What's behind all of this? "In some ways it stems from the growth of the debt buying industry," says Rhinegold. Collection agencies buy debt for pennies on the dollar, then hire lawyers to chase after even the smallest amounts. Of all of the unfair aspects of this chain of events, advocates say the most galling is that, in many cases, consumers may not even be legally responsible for the debts for which they're being jailed. In fact, the debt may not even be theirs, the amount may be inflated by penalties and attorney's fees, and it's almost certainly been written off by the original creditor -- who then resold it for pennies on the dollar to a debt-collection firm that plays hardball to get money from consumers. Often, says Rhinegold, the collector doesn't even have the paperwork that would prove that existence of the debt. In these cases, the judge will dismiss the case against the debtor. All the debtor had to do was show up for their day in court.

For this reason, Gail Hillebrand, financial services campaign manager at nonprofit Consumers Union, says it's vitally important for consumers to respond if you get a letter threatening legal action and requiring a court appearance. The name of the collector can change because of how often debt is resold, she warns. So if you have an outstanding debt, don't assume that a notice that seems to come from a different company than the original lender is junk mail. "The problem is that people don't realize what it is," she says.

It's important to do some research first, though. If the debt isn't yours, you can dispute it. Even if it is, showing up to court can sometimes lead to an outcome in your favor if the collector can't prove you owe the debt. Either way, it will keep you from being hauled off in handcuffs.

Source

Don't Get Scammed - Choose Your Credit Agency Wisely

Scams are everywhere and a fast growing problem in the current recession is a con scheme involving the impersonation of debt consolidation, negotiation, and elimination agency. Such plans represent a last hope for many people to get out of debt; they are effective and time proven to help you get out of debt. And thanks to the rising levels of unemployment (over 10% in some states) more people are using them than ever before, and some of them have fallen victim to the scammers.

If you are in a situation where you are looking at these debt plans in order to free yourself from debt, here are a few tips/methods for spotting which are legitimate agencies and which ones are scams.

Talk To A Credit Counseling Agency:

Credit Counseling Agency's exist to help people in debt figure out the financial options that are best for them. Agencies base it on peoples specific problems and resources. They are often non-profit agencies, and their services are either free or provided when you pay a small fee ($75 is average). Different agencies can offer different services (such as reverse mortgages, debt consolidation plans, and more) which means that it is important to figure out which agency will be able to help you the most.

If you are in a situation where you are looking at debt plans and credit agencies in order to free yourself from debt, here are a few general tips/methods for figuring which are legitimate and which ones are scams.

• If you are working with a lawyer or a paralegal concerning your debt, ask if they can refer a debt help agency. Most will either have lists containing reliable and certified credit agencies on hand or they will be able to find one for you fairly quickly.
• States usually require credit agencies to be accredited and to have certified counselors in order to operate within specific states. Always ask an agency if this is true for them - while not all agencies have certified counselors the best ones usually do. Agencies with counselors who are certified by an outside group (one that you can research for yourself) often have websites and phone lines that you can research and call.
• Understand what you are getting yourself into. If you feel confused at any point during your conversation with the agency, always ask them to go over the information again. Most agencies will be happy to do so and will give you as much time as you need to figure out the options being offered to you. However, agencies that offer their counselors a commission for each customer gained are less likely to do this than companies who offer their counselors a flat rate.
• Make sure that you have been walked through the agencies entire privacy agreement. If an agency refuses to do so, or you do not feel that their privacy agreement is tough enough, then don't use that agency! Your financial information has to be protected, and if one agency can't do it then another one can.
• Get things down in writing. Most legitimate credit agencies will offer written contracts, certificates, or other legally binding agreements. These written promises are in place to protect you; they often contain the name of the counselor who helped you and the entire agreement in physical writing. Make sure that you read through the agreement and that the writing is straightforward and simple. If it isn't or you find yourself confused by something on it, call the agency back and ask them to go over it with you. You can often get written agreements emailed to you by the agency in question.
• Check for them with your states Better Business Bureau (BBB). If they are legitimate, then the BBB will be able to tell you how helpful they are and whether or not the BBB has received complaints about the agency.

Related Links:

New York Times Scam Article: Is a brief expose on scams targeting people who have been hit hard by the recession.
BBB1: Tips from the better business bureau on how to find a good credit counseling agency.
BBB2: An article detailing the difference between debt consolidation, debt negotiation and debt elimination plans.

67 and Bankrupt: Are the Kids to Blame?

Larry and Abby are in their late 60’s. They are broke, about to lose their home and there is nothing they can do about it.
But it didn’t have to be this way.

10 years ago, they had over $500,000 saved on top of the two rental units they inherited when Larry’s mother passed away. At the time, Abby owned a successful small business and had a comfortable income. Everything looked like peaches and cream.

So what happened?

Patrick happened.

Pat is their son. He borrowed money from his parents seven years ago to open his auto repair business. Pat was a great mechanic but a horrible business person.

Larry and Abby just wanted to help their boy. They convinced themselves that the money their were forking over was just a loan. They were sure Patrick would pay them back some day.

But as the days passed, the likelihood of seeing that money again grew smaller and smaller.

He slowly drove the business into the ground.

But each time he feel deeper into the hole, Larry and Abby were there to bail him out. They were sure that all Pat needed was a little more working capital.

Of course, this enabled Pat to amass even greater debt. Within three years he exhausted all his parent’s savings. They had to sell all the real estate they inherited and they refinanced their home as well. Even after going through all that, Pat was left with debts of over $300,000 including $150,000 to the IRS.

He was much too proud to close the business. He was determined to make it successful – even if it meant spending every last dime his parents had.

So was Patrick to blame for Abby and Larry’s financial destruction?

Not in my opinion.

Abby and Larry volunteered to become an ATM machine for Patrick. Nobody put a gun to their heads. But that wasn’t really the root problem.

You see, the reason they wrote blank checks to Pat was because they didn’t take the time to think about what impact their decisions would have on their own financial future.

They were very mindful about their spending – except when it came to supporting their kids.

Pat needed money.

They wrote him a check.

It was automatic – and it was ridiculous.

Abby and Larry put their heads in the sand. They didn’t pay attention to their own financial plan. In fact, they didn’t have one.

Sure they had assets and income. But even though their estate was worth over $2.5 million at the high point, it didn’t last long once they started writing checks for $50,000 every other month to keep their kid in business.
I know this is an extreme example. You might not be sending huge amounts to your children….but the amounts don’t matter. And it also doesn’t matter how your kids spend the money you give them. I don’t care if they use your money to open a successful business or go to Harvard. If you can’t afford it then you can’t afford it. Period.

How do you know you can afford the support you give to your kids? Have you ever said “no” to your kids when they asked for financial help? How did that impact your relationship?

If you are on the receiving end of this, do you have an obligation to your parents to discuss the ramifications of their support?

Source

Debt Relief Grants To Clear Credit Card Debts

By: Walter Sigmore  
Debts are dreaded by almost everyone. No matter how confidently one promises to himself about using the credit card only when the need arises, all the users end up being guilty for having made purchases that are well beyond their budget. This in turn directs them to huge debts, which necessarily means headache. Debt relief grants can come to your rescue now. With these grants, it is easier to get rid of your debts and lead a peaceful life.


These debt grants can be utilized for your educational purposes, health care, to clear your household or store debts, etc. The good thing about such grants is that the rate of interest is relatively low and repayable by any person with not so good financial status. These financial grants are issued by debt consolidation companies and also nonprofit organizations. The nonprofit companies provide relief to people who are in critical financial crisis and can hardly find any means to get out of the same.

Credit counseling should be the first step that any person who is fully submerged in debts should look forward to. This will help him analyze the various options left and which one suits him the best so that he can comfortably get out of the debts. Normally, a person who has huge debts to clear will be in a confused state. Hence, it is necessary to submit to a credit counselor.

Before you can attend these sessions, you are required to collect all your credit bills and other debt bills. When you carry these to the credit counselor, he will analyze your financial status and with his experience, will provide you with all the possible scenarios. A good counselor will strive hard to lead you towards personal freedom and helps in stabilizing your future.

There are umpteen credit consolidators in the market today. While most of them genuinely struggle to help you out, there are scams too. You should conduct a brief research on which company has been successful in helping the debtors to restore their life like before.

You can compare the success rates of the various companies and zero-in on the best company that can help you out. You can try looking for nonprofit companies that offer debt relief grants for people who are in terrible crisis. If your condition is really poor, then you can benefit from such grants. Start today with ending your bad debt.

Source: Article Snatch

Medical Expenses A Common Cause Of Bankruptcy

September 25, 2009 in Healthcare


The following guest post was submitted by Kevin, web content writer for Resqdebt.com. For more helpful tips on how to save money and stay out of debt, visit Resqdebt’s website at www.resqdebt.com.

When Americans think of a person trapped in enormous amounts of debt, inevitably they think of irresponsibility. They think of fast cars and fancy stereo equipment. They think of people living the high life who could not afford it. In short, they think of a deadbeat. If statistics are any real measure, this impression could merit a change – and a touch of sympathy.

Far from financial irresponsibility, medical expenses are among the most frequent causes of families falling into debt and eventually filing for bankruptcy. The precise percentage of medical bankruptcies is in dispute. However, it is generally acknowledged to be a significant number.

Estimates for the number of “medical bankruptcies” have a wide range. A Northwestern University researcher has placed the figure at 17 percent of all bankruptcies. A group of Harvard researchers have recently increased their estimate to more than 50 percent. According to a Federal Reserve report, households with high medical debt are 28 times as likely to file for bankruptcy as other households. Most recently, an August report from the UCLA Center for Health Policy Research estimated that one in seven Californians carries some form of medical debt. With the nation gripped in a discussion about public financing of medical care, the number of medical bankruptcies has become a topic of note.

Medical bankruptcy can arise in several ways. The most common and obvious is the medical bill charged to the ill patient. When the patient personally suffers a chronic disease, deals with a condition that requires expensive treatment, or must pay for pricey medication, then it can be easy to run up thousands of dollars in costs. Insurance can help, but sometimes is not enough. However, there are other ways that medical expenses can drive a person or family into debt.

Many times the medical benefit is not for medical procedures performed on the person himself. They stem from helping to finance the medical care of a loved one. Sometimes this means caring for an elderly father or mother. Sometimes, tragically, this means caring for a sick child.

Also, some researchers describe “hidden costs” of medical bankruptcy. Often, these expenses consist of medical expenses placed on credit cards or paid on credit in some other way. This is an unwise thing to do. Once the expenses are placed onto the credit card, they become a target for interest and fees.

While medical expenses drive many people to bankruptcy, that is not the only option for handling overwhelming medical debt. Other options exist that can help a debtor take care of their debt before reaching that point. Among these methods are credit counseling, debt consolidation, and debt settlement. Each method can help debtors resolve debt and rebuild their financial health.

“Medical expenses are a common reason that people come to us,” said Heath Tudor, community liaison for Resqdebt, a debt settlement provider in Allen, Texas. “The unfortunate thing is that it randomly strikes good people. The fortunate thing is that it gives us the opportunity to help good people.”

Source: Frugal Dad