‘My girlfriend owes $200,000 in medical and credit-card debt’: She needs me to settle it — by paying a portion of the excellent quantity

May this make me accountable for her debt? Wouldn’t it be higher for her simply to declare chapter, or attempt to negotiate the money owed herself? Is that this a good suggestion?

The Boyfriend

Pricey Boyfriend,

Your girlfriend’s proposal is woven from crimson flags. 

You don’t say whether or not or not the credit-card debt was a part of your girlfriend’s medical monetary disaster, however both method I can perceive her fear, stress and — sure — desperation to clear this darkish cloud hanging over her head. 

The logic of your girlfriend’s proposal seems to be based mostly on her assumption that the collectors will likely be extra prone to negotiate along with her associate within the perception that she has no cash. Therefore, her paying you money for no matter sum you accept.

I’ve little or no doubt they’d see by way of that charade. Her estimate that you just/she would solely should pay 5% additionally looks as if a pipe dream: $10,000 is just not a ample incentive to desert pursuing her for the rest of the $200,000.

She is coping with no less than two collectors, not one. That additional complicates issues. Don’t comply with something. Keep away from being dragged into this monetary maelstrom. It doesn’t bode nicely for her capability to navigate life in a accountable method.

Medical debt is the No. 1 reason behind chapter within the U.S., with some research placing it at anyplace between 45% and 60% of complete filings, even though practically half of the U.S. inhabitants has employer-sponsored medical health insurance. 

I level this out to be able to forged some gentle in your girlfriend’s state of affairs. She is just not alone, and should profit from a member of the Nationwide Basis for Credit score Counseling, a nonprofit financial-counseling group.

Tens of millions of Individuals are both one paycheck away from the road, or one medical disaster away from chapter. Over half-a-million households go bankrupt yearly resulting from medical causes, based on one estimate. It’s a giant downside.

This research within the American Journal of Public Well being concluded that chapter is most typical amongst middle-class Individuals, who shoulder rising copayments and deductibles regardless of the Obama-era Inexpensive Care Act. 

Decrease-income Individuals “much less continuously search formal chapter reduction as a result of they’ve few belongings — corresponding to a house — to guard and face explicit problem in securing the authorized assist wanted to navigate formal chapter proceedings,” it discovered.

As for negotiating a debt, Equifax has some ideas. “When coping with a group company, begin your negotiations low. Begin by providing cents on each greenback you owe, say round 20 to 25 cents, then 50 cents on each greenback, then 75,” it says.

“Earlier than fulfilling any fee settlement you negotiate with a debt collector, ensure you get the phrases in writing,” the credit score bureau company provides. “Then, after your debt is paid off, request a written affirmation that you’ve got settled your debt.”

Message to your girlfriend: Sticking her head within the sand is just not an possibility. An excellent debt will negatively have an effect on her credit score report. However asking a liked one to place their head above the parapet in her place is a foolhardy errand. 

Even when she managed to have a good portion of her debt canceled, she would wish to report that canceled debt on her tax return. Inform her that. It might change her thoughts about her plan to have you ever renegotiate it on her behalf.

Try the Moneyist non-public Fb group, the place we search for solutions to life’s thorniest cash points. Readers write in to me with all kinds of dilemmas. Submit your questions, inform me what you wish to know extra about, or weigh in on the most recent Moneyist columns.

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