How to Get Out of Debt With the Get Out of Debt Guy » medical expenses

Dave is in a CCCS Credit Counseling Program But Feeling Hopeless

Steve Rhode — Wed, 27 Oct 2010 01:02:20 +0000

“Dear Steve,

Family of 4 (13 yr & 12 yr girls). My salary = $112K, wive’s salary = $40K. Total Assets $292K (liquid $10K, autos $9, house $200, 401K $73K). Total Liabilities $204K (mortgage $112, home equity loan $41K, credit cards $24K, 401K loans $22K, auto loan $5K). Net worth = $88K. . .plummeted 35% in last year.

How did we get here? Major medical expenses in past 2 years with wife. Fall in 401K value. Borrowing to keep up. We live pretty frugal, participate in a CCCS repayment plan.

Despite the attempt to control costs and pay down debt…things seem to be getting worse. My hope has run out.

I used to think that a positive net worth counted for something, but I am not so sure. Is there any hope?

Dave”

The Answer:

Dear Dave,

The only reason your situation feels hopeless right now is because you can’t see it working out the way you want it to. That does not mean that there is no hope, just hope in a different direction. I am 100% confident that there is a solution here for you and I am enthusiastic about that for you.

Before we look at moving money around to deal with this situation the underlying factor we need to deal with is if you can even afford your current lifestyle on your income. If you can’t, then we need to change where you live, what you drive, how you casually spend money.

A CCCS, credit counseling or debt management program can be a good way to get you back to a regular monthly payment when you’ve fallen behind. (Click here for credit counseling information.) But a credit counseling program is not going to reduce the total amount that you owe.

Borrowing money to make ends meet on an ongoing basis is a recipe for disaster. Nothing good every comes from that. At some point your income has to exceed your expenses and you need to start to dig yourself out from under the growing anvil above your head.

One option is that you could explore a debt settlement approach to do a lump sum settlement of your credit card debt. That would make it go away at once. Even though there are some drawbacks with debt settlement, like tax liability for forgiven debt, it is a way to eliminate your debt without bankruptcy. Click here for debt settlement information.

If you are currently struggling to make your CCCS credit counseling payments I can’t see how continuing that path is going to be a long term solution for you. If you have not done so already, contact your credit counseling office and explain your situation and ask if there is any possibility of lowering your payment slightly. But I doubt that lowering your monthly payment by $50 or $100 is really going to make the kind of difference you probably need.

To get deeper breathing room you’ll have to look at big changes and cuts. That typically means downsizing your home payment or car payments. These are typically the largest fixed monthly costs for you. Whatever you do, your health insurance premiums are not optional nor can they be discontinued, especially with the issues your wife has recently struggled with.

What I’m about to say may sound silly but just think through the numbers. You might be better off on a monthly basis if you could sell your home and rent rather than continue to carry the mortgage, and home equity loan. Selling might allow you to get enough cash out to do a debt settlement on the credit cards and loans, and payoff the auto loans.

Outside of making that really hard choice your best bet is to talk to a local bankruptcy attorney and see if a Chapter 13 bankruptcy might work for you even with the equity you’ve got. Click here for bankruptcy information.

Bottom line, big results require big changes. Without some big changes, your treading water but sinking will be the way you’ll go, unfortunately.

Big Hug!

@GetOutOfDebtGuy

The Answer:

Financial Concerns for People With AIDS/HIV

Amanda Miller — Sun, 30 May 2010 13:54:42 +0000

From How to Get Out of Debt

A diagnosis of HIV or AIDS will change your life. You may spend much of your time thinking about life and death and your own mortality. You might be trying to hold onto a job, if your health will allow it. You may be wondering who to tell — and who to turn to for support. You might be running from doctor to doctor getting prodded, poked and examined at every stop along the way. You may be too sick to leave your house and in need of practical help.

Chances are good that you’re also thinking about — or more likely, worrying about — money. That’s natural. You may have stopped working. Your medical bills may be sky high. You may wonder how you’ll afford the drugs your doctor suggests you take.

Money worries don’t arise only for those recently diagnosed with HIV or AIDS. Many people who have lived for years with the disease are no longer worried about survival — they are living longer and feeling great. You might be one of those folks, considering a return to work or trying your hand at opening your own business. You might want to apply for credit but know your credit report is filled with defaults and other negative notations.

This publication addresses financial concerns for people living with AIDS/HIV.

Recently Diagnosed

The first step you want to take — from a financial standpoint — is to figure out how much income you have coming in each month and the source of that income. Possible sources of income include the following:

wages or salary
income or dividends from investments
payments from a pension or retirement plan
rent payments
royalties
support payments from an ex-spouse
gifts from friends or relatives
private disability
state disability
Social Security disability, and
other public benefits, such as food stamps, unemployment compensation, veteran’s benefits or welfare

Next, you want to total up your monthly expenses. Be sure to include the following:

rent or mortgage (including any second mortgage or home equity loan)
real estate taxes and insurance
utilities (phone, gas, electric, oil, water, garbage)
food at home and out
clothing
laundry and cleaning
transportation — both automobile and public transit
credit card expenses
educational expenses, and
medical expenses

Step three is to subtract your expenses from your income. Chances are the result is a negative number. This means you need to increase your income or cut your expenses.

If You Were to Become Disabled

Most likely, if you are disabled, you can increase your income by applying for Social Security Disability Insurance (SSDI) or Supplemental Security Income based on disability (SSI). You can visit any Social Security Administration office to apply. SSI is based on income; SSDI is based on work credits. If you qualify for SSI, your benefits will start almost immediately. If you qualify for SSDI, you may be entitled to retroactive benefits to the time that you became disabled, although it may take a few months for the benefits to start. Through the Social Security Administration office, you can also learn about medical benefits — Medicaid or Medicare.

Cutting your expenses may be a bit more difficult, especially if you are already living as frugally as possible. But still, here are a few suggestions on how you might be able to cut your expenses or at least reduce your monthly debt burden.

Contact your creditors, particularly your credit card issuers, and let them know that you are disabled and out of work. In many instances, the creditors will simply write off the debt and stop their collection efforts. However, your creditors may sue you and obtain a judgment against you.
If you have student loan debts, contact the holder of your loans and ask for a disability cancellation form. You’ll need to have your doctor complete the part of it that verifies your illness, but it’s worth the effort. The Department of Education is fairly generous in granting disability discharges of outstanding student loans to people with HIV or AIDS.
If you own your home and make mortgage payments, contact the mortgage holder to see about a possible re-write of your loan. You may find the mortgage holder especially willing to re-write your loan if it is backed by one of the federal mortgage lending companies — Fannie Mae or Freddie Mac.
Contact your local utility company to see if you qualify for any low-income program. Even if you don’t, if your utility bills tend to be high in the winter (heating bill) or summer (air conditioning), at least ask the company to put you on a regular monthly payment where your unusually high bills are spread out over the year.
Ask your phone company about any low-income phone service options. Some companies offer special programs to provide very inexpensive basic service to seniors, the disabled and low-income people on fixed incomes.
Cancel your cable, or at least the premium channels.
To save on food expenses, ask at the Social Security Administration office if you might qualify for food stamps. Also, a local AIDS service organization can tell you about any free meal delivery or grocery programs for people with HIV or AIDS.

Improved Health

You may be stunned even to be reading this part of the article. Perhaps it’s been only a matter of months that you’ve felt so good. But now you are getting out daily, doing some volunteer work, playing tennis, biking or engaging in any number of other activities. And you now realize that this situation is probably not temporary. Your health has really improved.

Celebrating is in order, but you may not feel like celebrating. You may be confused — seriously confused. Part of you wants to go back to work. Another part of you is afraid of losing the benefits you receive. And you might be asking yourself if you should bother.

You know that your credit is shot from defaulting on the bills you couldn’t pay when you were sick. Now you wonder if a regular paycheck would mean financial freedom or would be a reminder of your past financial failures.

Disability Benefits

If you receive disability, you may not necessarily lose it, or all of it, by returning to work. Here are some specific rules. Be sure to check with the Social Security Administration or the carrier of any private plan for complete details.

If you receive SSDI (Social Security Disability Insurance) or SSI (Supplemental Security Income) and you return to work, you can generally continue to receive your benefits as long as you earn under $740* per month. So if you want to try your hand working part time or a few days a week, you might have nothing to lose. (*This amount is adjusted periodically. Check with the Social Security Administration to verify the latest amounts.)

If you receive SSDI and you want to return to work to earn more than $740 per month, you can do so for a nine month trial work period in which you can both work and receive your benefits. If, at the end of the nine months, the Social Security Administration concludes that you are able to work and earn more than $740 per month, your benefits will end after another three months. So in other words, if you want to return to work, you can do so and still receive your SSDI for a year.

If your SSDI or SSI benefits stop because you have returned to work and are earning over $740 per month, you will receive special benefit protection for the first 36 months that you return to work and receive no Social Security payments. During this time, you can receive your SSDI or SSI benefit for any month in which your income drops below $740.

If your SSDI benefits stop because you have returned to work, and within five years of when your benefits stopped you become unable to work again because of your disability, you can receive SSDI again within a month of when you stop working. You don’t have to wait out another Social Security waiting period, although you will have to file a new application.

If you incur any special costs because of your disability when you return to work, the Social Security Administration may deduct those expenses from your earnings before figuring out if your earnings exceed the SSDI or SSI $740 limit. These expenses include prescription drugs, transportation to and from work (under certain conditions), a wheelchair or any specialized work equipment.

If you receive payments from a private disability plan, your disability policy governs all terms and questions like whether or not you can work and receive some benefits, how long you can work before your benefits completely stop and whether or not you can re-qualify for benefits if you become disabled again with AIDS. Be sure to read your policies carefully and consult with an agent at the insurance company.

Medical Benefits

If you receive Medicare and you return to work, your Medicare coverage may continue for at least 39 months after the 9-month trial work period. After that, you may purchase the= coverage by paying a monthly premium.

If you receive Medicaid and you return to work, your Medicaid coverage will usually continue even if you earn over the SSI limits, as long as you cannot afford similar medical care and depend on Medicaid to work.

Your right to receive private medical benefits, or the cost of, should not be affected by your return to work.

Cleaning Up Your Credit File

If you’ve been out of work and on a limited income for a while, there’s a good chance that you let certain bills slide. You may have charged to the hilt on your credit cards and then defaulted, not having (or expecting to have) the ability to repay the debts. You might have even filed for bankruptcy.

Now you want to go back to work and reenter the credit world, but your credit file isn’t cooperating.

The first thing to know is that your situation isn’t hopeless. Millions of people, some who have been ill and others not, have tarnished credit records. The good news is that no one’s credit is too bad to be fixed.

After you follow the tips in the credit repair guide, your credit report should contain accurate information (even if negative) and recent information (all positive). That’s because the basic approach to credit repair is to make sure nothing in your credit file is incorrect, out of date or misleading. Then you can get a credit card – secured, if necessary – and use it to get positive information into your credit file.

Eventually, you may be in a position to apply for a car loan or home mortgage. The lender will review your credit report and see the old negative notations and the recent positive ones. Most lenders simply rely on the recent information and give little weight to the old negative stuff. That doesn’t mean the creditors will ignore it completely; you might qualify for a loan but with terms not quite as good as they would have been had your credit been in tiptop shape. This means you might be charged a higher interest rate or be required to make a larger down payment than someone with better long-term credit.

You may be inclined to offer an explanation as to why your credit was bad and now it’s getting better. This isn’t necessary. Creditors see millions of people whose credit has gone from bad to good. Rarely do those creditors care why. What they want to see is improvement. If you are pushed to provide an explanation, simply state that you were ill and you are now better. You cannot be forced to disclose the nature of your illness, and given the prejudice and misinformation that still exists about HIV and AIDS, you’re better off keeping quiet.

Consumer Credit Counseling Agency Said I Don’t Make Enough For Them to Help Me. – Theresa

Steve Rhode — Thu, 14 Jan 2010 19:02:08 +0000

From How to Get Out of Debt

“Dear Steve,

I am employed and make good money and have always kept my debts paid, but over the last five years, I have had to take on a 2nd mortgage and as the needs arose, I added several credit cards to my debt load.

Unfortunately, my parents are 73 and each year they hit a “medical maximum” on their insurance benefits – making it impossible for them to pay for their prescriptions, food, household expenses, and utilities. This has required me to make them a monetary “gift” of my savings each year to help keep them on their prescriptions, fed, with heat, water, telephone and electric services. Consequently, I have not a penny saved at this point.

Added to that fact is my older sister lives with me – she pays a small contribution to the household expenses and car payment. She has several medical conditions with cause her a lot of medical expenses, medication expenses, etc. She is disabled and this past year had to undergo a transplant surgery which left her out of work for 3 – 4 months; during which time I did not receive any money from her and in fact had to supplement her but paying for her uninsured medicals and co-pays and personal needs while she wasn’t working.

Currently her payments to me have become less in amount and erratic due to her medical expenses — all of which leaves me with lost income. I work as much overtime as possible and until recently worked a part time job as well. However, there is less overtime available to me and I have had to give up the part time job because of time restraints.

In August my Uncle/God Father (a bachelor with no children) suffered kidney failure and began dialysis treatments. He was very sick and we were told he wasn’t expected to live long. I met with his doctor and nutritionist and began making his food for him based on his very restrictive dietary needs. I have paid for food for him for the past 6 months and now find that he is unable to reimburse me any time in the near future (approximately $800) and he can only afford $100 a month for food – which means I have to supplement the rest of his food bill – yet another drain on my finances. Because I have to make everything for him from scratch, I do not have the time to work a second job now. I don’t see my family obligations improving in the future and expect their needs to increase as their health declines.

I have been able to keep up with the 1st and 2nd mortgage on my condo (which has a Homestead on it), keep up with the car payment and condo fees and household utilities – but for the past year I have been unable to pay on my credit cards. I just received the first notice of lawsuit from one of them and expect more to follow. My total credit card debt is a little over $35,000.

My total credit card debt is a little over $35,000. I tried a Consumer Credit Counseling Agency – but their evaluation left me $700 in the negative each month and they said I would need to figure out how to make an additional $700 a month. I am embarrassed, desperate and very frightened of failing to keep my home and being unable to meet my family obligations if my wages are garnished. I have no way of raising money to negotiate settlements on my debts. At this point, what are my options?

Theresa”

The Answer:

Dear Theresa.

Well obviously you are a very caring and compassion soul that is there to help other people in their time of need.

And now you are facing a situation that can really only be fully resolved with one solution, bankruptcy. I know it sounds scary but it is the only solution that gives you any protection and rights under the law.

If you don’t want to explore bankruptcy for yourself, you need to do it for the family that depends on you. Without any intervention in the debt situation you will soon find yourself in a position to not be able to care for them at all.

Click here to find a local bankruptcy attorney and go talk to them. You don’t have to obligate yourself to anything to talk to them and the appoint is usually free.

With bankruptcy your condo can be protected. The balance of your second mortgage that is higher than the value of the condo may be able to be reduced. You will be protected from lawsuits, your wages can’t be garnished, and collection pressure will stop.

However, you will need to keep in mind, if you don’t qualify for a Chapter 7 bankruptcy you will have to go into a Chapter 13 bankruptcy where you will repay part of your debt based on what you can afford. You and I don’t have a clue how much extra money that will leave you with without you going to a local bankruptcy attorney and discussing the situation.

Your homework: go talk to a local bankruptcy lawyer and report back what you discover.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

As Medical Costs Rise, More People to Charge Medical Care

Steve Rhode — Sun, 12 Jul 2009 23:50:55 +0000

From How to Get Out of Debt

When doctors first began accepting credit cards for payment years ago, patients were shocked. The impression was that the doctor was just in it for the money. Then a few years latter some medical offices began to offer credit company backed financing for larger medical procedures, again patients were shocked. This trend was lead by GE Money and their CareCard and Citibank.

Doctors are medical care providers but they are also their own little small businesses as well. Unless a physician works for an entity that doesn’t give a damn about income, then that physician is going to be responsible to themselves or a parent corporation to make sure they are bringing in a lot more money than the doctor costs.

I know you’d like to think about your doctor as that friendly local professional that cares for the community no matter what. Well I hate to burst your bubble but in these days of declining insurance reimbursements and increasing administrative expenses, maximizing income for the small town Main Street doc is just as important as it is for the hospital based physician.

But patient beware. It is estimated that over 60% of bankruptcies can be traced back to medical expenses and if you find it necessary to pull out the plastic to pay for your next medical office visit you can’t afford, you might just be infecting yourself with terminal debt that can only be treated with bankruptcy.

@GetOutOfDebtGuy

Holy, Divorced, Disabled and Desperately in Debt

Steve Rhode — Wed, 26 Nov 2008 14:11:11 +0000

From How to Get Out of Debt

Holy

“Dear Steve,

I am a divorced 56 year old woman who suffered an injury as a teacher in a public school in May, 2000. I now suffer with a severe and permanent chronic pain condition (Reflex Sympathetic Dystrophy).

Social Security refused me any disability (chronic, debilitating pain is not considered disabling) and due to the struggles I’ve experienced throughout these 8 long years, I am deeply in dept. This probably would not have happened had I not been ill and needed pain med and treatments, which I am convinced alter my ability to make good decisions.

I relied upon help from my brothers who abused their powers and left me owing close to $50,000 in credit card and medical debt. I am trying to work but just can’t function well enough to be able to pay these debts off, and still accumulate medical expenses at a frightening rate.

I am trying to sell medicare insurance in an attempt to work again at my own pace since I never know if I can work from day to day and can’t handle stress associated with typical 8-5 jobs. It is hard and I feel like I’m adversely affected by my meds and am always trying alternate forms of therapy to alleviate my symptoms, but instead am feeling worse as time goes by.

Is bankruptcy my only option? I was never a credit risk until 2005 when my brother’s manipulations put me in debt, and my medical expenses escalated at a frightening rate. I have no property anymore, and live with my son.

I went from having a 750 credit score, nearly $20,000 saved after my divorce, no debt and the ability to earn between $45,000-75,000 a year to struggling on $14,770 a year in disbility retirement. My lousy retiree insurance plan requires a $5,000 a year deductible!

My medical costs (meds and payments on accounts) average $500 per month, and I’ll never pay some of those debts off, much less be able to pay future expenses off. My car is 11 years old and pretty close to expiration, my brothers stole anything of any value I could sell, and I just don’t know what to do?

Unfortunately, my children are young and struggling with their own businesses and lives, and can’t help much, nor do I want their help. Can you suggest a plan for relief of some kind?

Holy”

The Answer:

Dear Holy,

I am positive that with everything that has gone on and is going on it must feel like there is no direction to head in to get any sort of relief from the drumming pain and depressing debt.

Let’s tackle this is stages.

Disability

Just because you have been denied disability does not mean you are not entitled to it. It just means you’ll have to fight harder for it, that’s all. Many denied disability claims are approved on appeal as they move up the chain of command. See a previous question, “Roise Has Panic Attacks, Can’t Work, And Is Now Out of Money” for more information on steps you can take to push your case forward. Instead of giving up, get professional help.

Growing Medical Debt

You stated that you are still accumulating medical debts at an alarming rate. That concerns me. Even if you went bankrupt right now I’m not confident that it would place you in a better position since you may just accumulate debts that you will be unable to pay following bankruptcy. So in that situation, while bankruptcy may eliminate your past debts, it won’t do anything to improve the future.

Stop Paying Your Bills. Really!

The best course of action for you to take right now would be to stop paying the bills of unsecured creditors that would be discharged in bankruptcy. I know that sounds crazy, but it’s not.

In your current situation you have no assets, cash in the bank or property for a creditor to go after you if they sue you for non-payment and win. If you don’t go bankrupt the advantage is that you will not have to pay for bankruptcy, with money you don’t have but the downside is that not paying your bills will leave you with bad credit, subject to collection calls, and possible lawsuits. If a creditor does decide to sue you and you lose, you can always go bankrupt then to get rid of those claims.

The most stressful part of not paying your bills is dealing with collection pressure. But there are ways to deal with that. See How to Hide From Debt Collection, the Debt Collector, and Creditors for details.

If you find that you are able to pay for your regular expenses after you stop paying your bills, then maybe bankruptcy is an investment worth making. In that case, you should meet with a local bankruptcy attorney and ask for a free bankruptcy review to discuss your situation.

But, if you continue to get further behind then going bankrupt now will prevent you from going bankrupt latter and completely discharging your debts for another eight years and that can leave you hassled and without options.

Additional Steps to Take

There are some other ways to help increase you deal with this situation. While they won’t give you income via a check, they can lower your expenses to help you live.

Rent assistance advice is possibly available through the Housing & Urban Development agency.
For medical care you quite possibly qualify for Medicaid. You’ll have to contact your state Medicaid office to learn how.
You may be eligible for food assistance programs, like SNAP.
Job directories are available online.
You can contact your local city or county health department and let them know your situation and see what local programs may be available.
I’d explore the Social Security denial some more. The DisabilitySecrets website has some good advice on it. Just because you have been turned down, does not mean that you are either not eligible or can’t get it. It may take a fight. You can also get a free case evaluation here.

Gratitude

This may be the hardest step to take but the most important in dealing with your situation. While your situation is bad, it could always be worse.

It sounds like you have children that love you, you’ve lead a nice life up until your medical problems, and you are still able to see a beautiful sunrise and draw a breath.

Rather then feeling as if life is raining down on you, look for every opportunity to be grateful for what you do have. While your retiree insurance plan has a “lousy” $5,000 deductible, at least you have some retiree insurance, many don’t.

Each hour and each day start focusing your attention on being thankful for the help you do get, the lives you changed as a teacher, the door held open by a stranger, a hug from your child, or a nice word you can offer to a stranger. Smile. Granted, it won’t change the numbers of your debt but it will help you to move through the days with more grace, instead of more fear.

Big Hug!

@GetOutOfDebtGuy

How to Get Out of Debt With the Get Out of Debt Guy » medical expenses

Dave is in a CCCS Credit Counseling Program But Feeling Hopeless

The Answer:

The Answer:

Other Related Articles to Read

Financial Concerns for People With AIDS/HIV

Recently Diagnosed

If You Were to Become Disabled

Improved Health

Cleaning Up Your Credit File

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Consumer Credit Counseling Agency Said I Don’t Make Enough For Them to Help Me. – Theresa

The Answer:

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As Medical Costs Rise, More People to Charge Medical Care

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Holy, Divorced, Disabled and Desperately in Debt

The Answer:

The Answer:

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