‘My girlfriend has $200,000 in medical and credit card debt’: She wants me to settle it – by paying part of the outstanding amount

By Quentin Fottrell

‘Could that make me responsible for his debt? Would it be better for her to simply declare bankruptcy or try to negotiate the debts herself?

Dear Quentin,

My girlfriend owes over $200,000 in medical and credit card debt, but she thinks it can be settled for 5% of the total amount if someone else pays it.

She reasons that her creditors would have no claim to anything on my behalf, so they will take anything I offer to settle on her behalf. She said she could give me the money in cash.

Could that make me responsible for his debt? Would it be better for her to declare bankruptcy or try to negotiate the debts herself? Is it a good idea?

The boyfriend

Dear Boyfriend,

Your girlfriend’s marriage proposal is woven with red flags.

You don’t say whether or not credit card debt was part of your girlfriend’s medical financial crisis, but either way, I can understand her worry, stress, and – yes – desperation to dispel that dark cloud. suspended above his head.

The logic of your girlfriend’s proposal seems to be based on her assumption that creditors will be more likely to negotiate with her partner thinking she has no money. Therefore, she pays you in cash for the sum you accept.

I have very little doubt they would see through this charade. His estimate that you would only have to pay 5% also seems like a pipe dream: $10,000 isn’t enough incentive to drop the lawsuit for the rest of the $200,000.

She’s dealing with at least two creditors, not one. This further complicates matters. Do not accept anything. Avoid being drawn into this financial maelstrom. This doesn’t bode well for his ability to navigate life responsibly.

Medical debt is the number one cause of bankruptcy in the United States, with some studies putting it at between 45% and 60% of total filings, despite the fact that nearly half of the American population has health insurance sponsored by the ’employer.

I’m pointing this out to shed some light on your girlfriend’s situation. She is not alone and can benefit from being a member of the National Foundation for Credit Counseling, a nonprofit financial counseling organization.

Millions of Americans are either a paycheck away from the streets or a medical crisis away from bankruptcy. More than half a million families go bankrupt each year for medical reasons, according to one estimate. It’s a big problem.

This study published in the American Journal of Public Health found that bankruptcy is more common among middle-class Americans, who are shouldering increasing copayments and deductibles despite the Obama-era Affordable Care Act.

Low-income Americans “less frequently seek formal bankruptcy relief because they have few assets — like a home — to protect and face particular challenges getting the legal help needed to navigate bankruptcy proceedings. formal,” he said.

As for negotiating debt, Equifax has some advice. “When dealing with a collection agency, start your negotiations low. Start by offering cents on every dollar you owe, say about 20 to 25 cents, then 50 cents on every dollar, then 75,” says- he.

“Before completing any payment agreement you negotiate with a debt collector, make sure you have the terms in writing,” the credit reporting agency adds. “Then, once your debt is paid off, ask for written confirmation that you have settled your debt.”

Message to your girlfriend: sticking your head in the sand is not an option. An unpaid debt will negatively affect his credit report. But asking a loved one to put their head above the parapet for them is a daredevil rush.

Even if she managed to get a significant portion of her debt forgiven, she would have to report that debt canceled on her tax return. Tell him that. This could make him change his mind about having you renegotiate on his behalf.

Check out the private Moneyist Facebook group, where we seek answers to life’s trickiest money problems. Readers write to me with all sorts of dilemmas. Ask your questions, tell me what you want to know more or weigh in on the latest Moneyist columns.

The Moneyist regrets not being able to answer the questions individually.

By emailing your questions, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including through third parties.

Read also :

I built a real estate portfolio with 23 units while we were together. How much should I give my fiancé in our prenup?

“We Will Not Survive Our Money”: How Can We Give Our Nieces and Nephews $10,000 Without Offending the Rest of the Family?

“I hate being cheap”: is it always okay to arrive at a friend’s house for dinner with only one bottle of wine?

-Quentin Fottrell

 

(END) Dow Jones Newswire

10-26-22 1341ET

Copyright (c) 2022 Dow Jones & Company, Inc.