Before 'Medical Bankruptcy': Consumer Options Can Salvage Credit

Freedom Financial Network Comments on Harvard Study Citing High Medical Expenses as Cause for High U.S. Bankruptcy Filings

San Mateo, CA (PRWEB) February 14, 2005 -- Nearly half of the nations 1.5 million bankruptcy filings in 2001 were because of medical costs, despite the fact that 75 percent of people who experienced medical bankruptcy" had health insurance, according to a new study from Harvard Law School and Harvard Medical School. While medical costs and subsequent loss of income can cause serious financial troubles, an alternative to bankruptcy does exist, says Freedom Financial Network, LLC, a California-based debt resolution service.

Many people dont realize that bankruptcy is not the only solution for people who have the type of financial trouble cited in the Harvard study," says Brad Stroh, co-CEO of Freedom Financial Network. Consumer debt resolution, he explains, is a solid -- but less well-known -- alternative. When medical costs have run finances into the ground, debt resolution companies such as Freedom Financial Network work for consumers to negotiate lower payments to medical providers. Most of the time, consumers gain significant savings."

Unlike credit counseling, debt consolidation or debt management plans, consumer debt resolution lowers actual principal owed -- not only interest rates or minimum payments. While the credit counseling industry has come under fire by the IRS for taking advantage of non-profit" status and relying on funding from creditors, debt resolution serves the consumer directly, in a position of mediation and negotiation with unsecured creditors. For people who have severe debt trouble caused by medical expenses -- as well as job loss, divorce or other unexpected events -- the result is a less complicated alternative to getting back on financial track.

Before filing for bankruptcy, consumers with severe debt from medical problems should consider these options:

1.   Plan ahead with insurance -- Before medical costs arise, be sure you have the best insurance you can get. Some plans now carry lifetime maximums of $8 million or more. One tough illness can run through a $1 million maximum before you know it," Stroh notes.

2.   Pay critical bills first -- The most important payment to make is your mortgage. If you fall behind, you can lose your house," Stroh says. Hang onto your house above all else."

3.   Know what you owe -- After a serious medical incident runs up hospital bills or leaves you without income, collect all your bills to learn exactly how much you owe. Dont waste time making a plan, only to get socked with a late, huge hospital invoice," Stroh suggests. Call the accounts payable departments of all involved parties -- hospitals, doctors offices, emergency rooms (which might bill separately for physicians) -- to sum up costs.

4.   Choose help carefully -- If you need help to negotiate payments, be sure you are working with a reputable debt resolution service that works as an advocate for the consumer, not creditors. Payments to help resolve your debt shouldnt add to your overall debts, and all payments should be clearly spelled out from the beginning. At Freedom Financial Network, for example, consumers pay a fee that represents a nominal percentage of savings gained. Dont allow optional" fees; find out exactly what your obligations will be.

Filing for bankruptcy can destroy your credit rating for a decade," Stroh explains. Customers with serious medical bills have been through enough trauma. They need to understand that they have options to resolve their debt, with less impact to their credit rating than bankruptcy."

Freedom Financial Network, LLC (www.freedomdebtrelief.com) provides consumer debt resolution services through its Freedom Debt Relief, Freedom Foreclosure Relief and Freedom Tax Relief divisions. Based in San Mateo, Calif., Freedom Financial Network serves more than 2,000 clients nationwide and manages more than $70 million in consumer debt.

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