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Not really a bankruptcy question but I think you would know best about this. I have a friend, she is a single mother of two. Leads a very wholesome life and really excels as a parent. She maintains a clean home and provides very well for her children. She doesn't waste money, nor does she spend it on herself. She makes $8 an hour and has no other income. You can imagine how much extra money she would have. She cannot afford medical insurance for herself and has accrued some unpaid medical bills. I am currently trying to help her financially and help her budget. She will be receiving a tax refund in a few days. I suggested we attempt to at least pay some of those bills with the money, although she has other things she needs, tires for her car, etc. So, my question is which bills to pay. For example, one bill was for an emergency physician group. The date of service was 7/7/2010 in the amount of $539.00 and she received a Final Notice - Settlement Offer from an attorney on 3/10/2011 where they offered to reduce the payoff amount of $377.30. What this appears like to me is they may have bought the debt from the physician?? She has not received anything else from them. So, would this be the first or the last you would pay. To make it clear, they are all legitimate bills that should be paid, the truth is, they will not all get paid anytime soon. She has already been faced with one medical group refusing service until she paid an old debt to them. It took her 9 months to come up with the money but she did get them paid so she could get the necessary medical attention. So, that kind of bill, we want to pay off first. If we do not pay the first mentioned bill now, what can come of it in the future if they had bought the debt from the physician? Is it likely or unlikely this bill will show up again in the future or is it an indicator that they have basically given up on that one? There are a couple more from SLN collections for medical. Everything she has that is past due is medical. She doesn't charge up credit cards for unnecessary items like video games, etc. Everything she has that is past due is unexpected medical bills. Or, is it possible that we may contact all of them and see if they would settle for less if we paid them a lump sum? And is that smart or dumb to try that? Is there any risk in trying that?
Optional Information: State/Country relating to question: North Carolina
Hello and thank you for your question here on Just Answer.
It seems like you are a great friend! I'm sure it cant be easy a single mother of 2 with that kind of income.
Generally, medical bills are not going to file a lawsuit for something that small.
They are debts that she should pay if she can.
As far as if she should pay them now, that is a hard question to answer.
I dont know how much her tax refund is going to be, nor do I know what other medical debts she has outstanding.
Also, I do not know if she needs any of the tax refund money to pay her regular monthly living expenses.
So I am going to make some assumptions, if you want to fill in some of the gaps that we can discuss how that would change what I am about to tell you.
First, she needs to make sure that her and her kids basic living expenses are taken care of, if she is able to do that on her regular income then she can use the tax refund money to resolve some of the unpaid medical debts.
Also, she should put aside an emergency fund of at least $1,000, this is in case something unexpected comes up and she needs the money, again its for EMERGENCIES.
If she still has money left over after the setting aside money for her emergency fund the what I would do is take what ever money is left over and try to settle all of the past due medical debts with that money.
For example.... if she has $2,000 left over from the tax refund and she has $10,000 in medical debts, if she split that money evenly among all the medical debts, each one would get 20% of the outstanding balance. I would then contact each medical debt creditor and offer then 20% as a lump sum settlement to settle the debt in full.
Explain to them your friends situation, her income, single mom with 2 kids etc. If the creditor agrees then make sure they send you a letter stating they will take $XX.XX to settle the debt in full.
Once you have the settlement letter, send them a cashiers check or money order along with a copy of the letter, be sure to send it overnight mail or some way that you can track and prove when they received it. Also make sure to keep a copy of the letter and payment for ever just in case someone tries to come back and make you pay more.
A great resource for dealing with debts in general is Dave Ramsey. Just goole him and you will find him.
Please let me know if you have any questions or need clarification on any part of my answer.
Thank you!
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She needs some things now, like tires, which are slick and unsafe but risking it. She does not make enough to save right now. I help her a little to keep her floating but I can't do much. I understand your response perfectly and I am debt free. I spend less than I make. The difference is, I don't have 2 small children anymore, mine are grown. There is little choice for her sometimes, she only spends on clothes, food, car, house, etc. I will take your advice on offering them a reduced amount. The only question I have is, will any of that debt disappear or will it all, always come up in the future? It seems to me the one bill mentioned, they have not contacted her in over a year, could it be they have given up or written it off? Or will every debt always haunt you in the future? Or is there any way to check that?
If she needs the money for other things to survive then I would be hard to recommend settling with them.
The Statute of Limitations in NC is 3 years.
so if they do not sue her within 3 years they cannot legally do so and at that point there is nothing they can do to force her to pay anything.
I would get new tires and take care of my survival first.
Ok, I understand. There is a little money left after she buys tires. We still want to at least attempt to pay some. How will she know the difference in a collection letter and when she is actually being sued?
You will know. When you are served someone will come and personally hand her a copy of the lawsuit and it will have instructions on it as to what to do.
Sorry, when you are SUED someone will come...
when they hand you a copy of the lawsuit, that is called being "served"
Ok, thank you so much for your help. If we had a 20% settlement on everything, she would be very close to paying them all off with just what she has left after tires.
Experience: I have filed over a thousand bankruptcy cases.