I Am in Debt Over My Head for Medical Supplies to Care for My Wife

Question:

Dear Steve,

I’m in debt over my head had to pay for some of my wife’s medical supplies because my insurance would not cover it so I used my credit cards to buy it and now I’m barely surviving to pay my Bill’s.

I am in 72000 dollars in debt and would like to make it into one monthly payment so that I can pay a set amount because some of my card interest rates are 19%

Matthew

Answer:

Dear Matthew,

From what you’ve shared you found yourself in a situation where you needed to use credit to help make ends meet.

In your situation, that reason was medical supplies to care for your wife.

Dealing with debt is easy. The bigger issue in your situation is what are you going to do once the access to credit is no longer available.

There are shell games you can play to postpone dealing with the debt. For example, you can hunt for low-interest rate cards you can transfer your balance to. That might make sense if you can pay off the balance before the introductory period expires. If you can’t you will most likely find yourself stuck on a few balance transfer credit cards with higher interest rates.

If you decided to find a debt consolidation loan, your interest rate is going to be determined by your current credit score and how much debt you are carrying versus your income. This is called the debt to income ratio.

But if the debt is created because you did not have the income to pay for the medical supplies then it is possible your debt to income ratio is not that great. For an unsecured debt consolidation loan with a lower credit score or a high debt to income ratio, an interest rate of up to nearly 18% might still be possible.

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Lending Club, one of the unsecured lenders, shows their current interest rates below.

My first thought would be to evaluate if without the debt or access to credit if you would be able to make ends meet. If the answer is yes, then you could consider a quick Chapter 7 bankruptcy to eliminate the debt tax-free in about 100 days for the least amount of money.

You can always find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.

But let’s say you decide to hunt for the consolidation loan and get one. You will have to make the consolidation payment and will that leave you with enough income to pay for the ongoing medical expenses?

To help make ends meet you should evaluate if you are eligible for any additional medical or life benefits to help you through. I suggest visiting Benefits.gov.