Medical Debts. Should you take out a loan to pay them?
An email from a client (edited to preserve confidentiality):
“Good morning. On October 31, 2022, [my husband] had to have surgery to remove his gallbladder. The hospital is requiring payments of approximately $400 a month on the $5,049.97, a sum I am unable to accommodate with our budget. My husband’s income makes us ineligible for an adjusted payment plan. The representative offered to help us apply for a loan facilitated by the hospital through a local bank, but I informed her that I can’t consider any loan without speaking to you. What, if any, actions should be taken in regards to these bills as relates to our bankruptcy?”
This seems to be a new trend with hospitals. They help customers to get loans to pay the medical debts.
I told my client the loan helps the hospital, not them. A loan involves interest, late fees, etc. How does this help my client?
My client is in the middle of chapter 13. I informed them that the hospital could send the account to collection and they may be sued, but their wages could not be garnished until the bankruptcy was over.
Push back, I told them. Tell them the court will not approve the loan. This is not like getting a car loan, something you need for work. This just changes the name of the creditor from Hospital to Bank.
I told the client to review their budget and pay what they can afford. Just make payments and don’t worry about pleasing the hospital.
“The hospital is requiring payments of approximately $400 a month.” Requiring? How are they “requiring” this? This is just old-fashioned arm twisting. My client is in Chapter 13. Post-petition wages are considered to be property of the bankruptcy estate and cannot be garnished until the case is completed.
Creditors are always demanding full payment or monthly payments that are not affordable. They give the false impression that they will not accept smaller payments. Don’t believe them.
Bill collectors accept every payment you send them. The hospital demands $400 per month. Can’t afford that? Send them $200. Keep sending the payment. They will accept every dime you send them.
Image courtesy of Flickr and dreamingofariz.