Should I declare bankruptcy?

Question

I have less than $5000 in debt, but it's in medical bills that I have failed to pay off in the past year. I am now in collection and it's ruining my credit. Should I declare so I can have a clean slate? Or will my credit be the same if I just ride it out and pay it off? Thanks!

for the record, i did not "rack up debt" and am now trying to take the easy way out. it's medical bills. i was in the hospital for a week.

Answer 1

Having $5,000 in debt is not really too bad. However, I know it can be a burden when you can't afford to pay mortgage and the necessities of life and have debts. Your debt can be fairly easy to pay off if you commit to doing it. I can show you how.

There are many adverse things to consider about bankruptcy and the stigma remains with you for 7 to 10 years or more, depending on which chapter of bankruptcy you file. In addition, I don't believe you can use bankruptcy only having $5,000 in debt as there is a minimum with bankruptcy. There have been people who have had over $100,000 in debt and have gotten out of it without filing bankruptcy. If you will commit yourself to paying off the debt without stopping and giving up, you will feel so much better. Your credit will be much, much worse by filing bankruptcy. And remember, it's not about obtaining the best credit score, it's about eliminating the debt. If you eliminate your debt, the credit score will work itself out.

You can also call the hospitals or doctors offices and ask for a form to fill out to have the bills reduced or forgiven. Most will work with you and some may even forgive the debt totally. You should always contact your debtors. Only call them from home, not from your work or from your cell phone as every number you call from gets registered in their system and they will call you on those additional numbers in the future. If you don't let them know you are going to work at paying off the debt, they will continue to call your home, your work, your husbands work if you are married, and continue to harrass you. It is always best to stand up and let them know you will pay, but can only pay a certain amount, whatever you decide after listing all your debts. They may tell you they won't accept that, but I don't believe there is anything they can do as long as you are paying on every debt each month without missing. If they continue to call you even after you discussed with them your payment plan, ask them politely to never call you at home or work again, that you are truly doing your best to pay the debts off, and you do not wish to hear from them while doing so.

When you have a mortgage or rent, you always want to pay that first and always the total amount, plus pay all your utility bills which are necessity as you never want to lose the roof over your head, or be without electricity, water, gas, fuel, etc. You charged off debts should be paid as they will remain with you forever on your credit report.

Below is a system I have followed, as well as many others.

Make a list all your debts by amount you owe from smallest to largest. Then begin by paying the "most" amount you can each month to the smallest debt with the idea of paying it off quick. Then, only pay a small minimum payment on the larger debts. Continue doing this every month until you have the smallest one paid off. You then start paying the most you can on the next smallest debt in line and go on from there until you have each medical bill paid off. Every time you get any extra money, whether it be $5, $10 or more, apply it against your debt even if you have already sent in a payment. You can send in payments more than once a month.

The following are additional suggestions so that you have more of your paycheck left to use to pay off debts:

Don't go out to eat or go to fast food restaurants. It's "beans and rice, rice and beans" as Dave Ramsey always says which just means (extremely cheap meals that you can fix at home). LOL Also do things to make money like garage or yard sales, sell on eBay, get a second job, babysit, anything to help you get money to apply toward that debt. Sell everything you don't need.

You can get more help on how to accomplish this by reading and listening to Dave Ramsey. He has a talk show which you can hear on line through his archives, OR live on line, or by radio by entering your zip code in you live in the US ... and find out what time of day his show airs. Plus there is a lot of reading material on his site to get you started. In addition, he has forums from his site to get help and advice from other people who are in debt. Dave has been there (with debt) and knows what it is like and is now helping people to get out of it. There are people that have followed this method with over $100,000 in debt and have gotten it paid off without going through bankruptcy and without getting some debt help or debt consolidation company to do it for them. Dave's website link is below.

I hope this information helps you and you get the relief you need. Best of wishes to you. The link for Dave Ramsey's website is below.

http://www.daveramsey.com

Answer 2

You should just ride it out and pay it off. People need to take responsibility for their own debt instead of racking up debt, then taking the easy way out (which only hurts other responsible people who do pay their bills). If its in collection, negotiate to see if the hospital will forgive some of the debt and allow you to pay off a smaller amount and be free and clear. Your credit report will then show that you satisfied the debt. A bad check mark since it was late, but not as bad as a bankruptcy which will be on your report for 10 years and affect your ability to get credit at decent rates in the future. If you don't already own a house, you'll find that you'll only be able to get a mortgage at an exorbitatnt rate of interest if you have a bankruptcy on your record.

Answer 3

No no no. My sister declared and I considered it but she said it is more trouble than it is worth. You get denied for everything afterward. Besides I wish I only had $5000 or even $25,000 in debt. Plan to pay off your debt in a certain length of time. That is not really an awful lot of debt. Plus you have to pay a bankruptcy lawyer too.

Answer 4

Bankruptcy laws have become extremely stringent. I don't believe you'd qualify for filing (maybe a Chapter 13). Regardless, a bankruptcy now will NOT help your credit in the least. You should call the collection agency that holds your debt and see if you can work out some kind of monthly payment plan.

Answer 5

If your problem is with medical debt, then filing for bankruptcy is the best for you. When you file for bankruptcy, your debts are separated into different categories. Such debts receive special priority treatment and can’t be eliminated through bankruptcy. Luckily, medical debt is not one of them. In bankruptcy, medical bills are considered general unsecured debts just like your credit cards. This means that medical bills don’t receive priority treatment and can easily be wiped out by filing for bankruptcy. However, not all types of debs are removed, student dets for innstance are not. For more detailed information, visit www.bankruptcyexpertsdarwin.com.au.

Answer 6

Do not declare bankruptcy for medical bills. You need to check out Dave Ramsey's web site on financial freedom. You can make arrangements with hosp/etc.. to pay them off at your pace. Bankruptcy will follow you for at least 7 years.

Answer 7

the medical debt should'nt have ruined your credit at all i had 250k1998 in medical debt and still had a decent score and was gettin cc all the time 3k + cards thankfulll its been over 7or so years and its all been cleared off my record now
id double check your credit try 2 different companys ..
consumer credit-medical are to diffrent credits

Answer 8

confident .They majority of the debt is held by making use of the Fed and we pay making use of contemporary sales so we could cancel the interest money and good purchase with China and Japan for the different 2.3 trillion . entire foreign places debt is decrease than 3 trillion . All of this may be a threat IF we balanced the funds which the Simpson / Bowles Plan does .

Answer 9

Definitely, if your debts is really out of control then look for an experts financial consultant.

Answer 10

Bankrupcy is really a last resort... do not lisen to anyone that tells you it is a good option. Work with the creditor until you have no other options first.