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

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. hanging over 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 #1 cause of bankruptcy in the United States, with some studies putting it at between 45% and 60% of total filings, despite the fact that almost half of the American population has employer-sponsored health insurance.

I’m pointing this out to shed some light on your girlfriend’s situation. She is not alone and can benefit from a member of the National Credit Counseling Foundationa non-profit financial advisory organization.

Avoid being drawn into this financial maelstrom.

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 in the American Journal of Public Health concluded that bankruptcy is more common among middle-class Americans, who endure rising 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 the negotiation of a debt, Equifax has some tips. “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,” he says.

“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 in its place is a reckless run.

Even if it managed to cancel a significant part of its debt, it would have to declare that she canceled a debt on her tax return. Tell him that. This could make him change his mind about having you renegotiate on his behalf.

Check the private Facebook Moneyist 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.

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John A. Bogar