credit workout
How to reduce Credit Card Interest Rate
The Credit Card Act has provided a great deal of added protection for consumers in the use of credit cards and the manor in which banks can market to its customers. However, one area that was not addressed was limiting the rate that can be charged after proper notice is provided to existing customers. As a result, many consumers have found that just trying to stay current on their credit card payments is very difficult, especially when you try to pay back the amount that you charge each month. The reason for this is that the past debt with its interest payments tends to increase each month through negative amortization.
There are a number of ways to reduce your inertest rates. However, one way that will work very well for those high rate cards, which consumers typically do not use any longer, but do carry significant balances is to negotiate with your credit card company on the rate based upon some consideration the consumer can provide. For example, you may want to propose to not use the card any longer, but just pay back the principal and interest currently owed to the creditor. In consideration for that, ask if the credit card company will reduce the interest rate. This in affect will shut off your credit card, but at the same time, allow you to pay the debt down.
The key to negotiating to pay and not use the card is to not harm your credit rating or FICO Score. The reason being, you do not want other creditors to reduce your limits or raise your interest rates based upon a reduction in your credit score. The question then begs to be asked, how will such an arrangement be reported on your credit report? It is imperative that when negotiating with the Credit Card Company, you require them to continue to report your account as open and current. This type of negotiation is not a debt settlement, and you are not proposing to pay any less then 100% of the unsecured balance. All that is happening is the Credit Card Company can take solace in knowing that the consumer poses no additional risk to incur fees that can not be paid back
How to handle medical debt
There are many forms of unsecured debt, including credit cards, personal loans and essentially, any debt that is not secured by an actual asset or collateral. However, the one form of unsecured debt that does not get much treatment or conversation is medical bills.
Incurring significant medical bills could happen to you as a consumer at anytime. If you are injured or become sick and require a trip to the emergency room or surgical room, it could result in thousands of dollars in medical bills. Even with health care insurance, you may end up with appalling debt due to your medical situation. To make matters worse, many health care providers have unfair billing practices that only add to the financial issues you may confront. The problem is that many patients simply do not think about this and what happens if the insurance declines to pay, or there is a large co-payment required.
Medical Bills are viewed in the same way as Credit card debt, it is unsecured. However, if you don’t pay your bills you can be sued for the balance. Health care providers can send medical debts to collections, file judgments, garnish wages, obtain home liens, and even take you to court over medical bills that you can’t afford to pay.
Let’s take a quick look at exactly how medical insurance Works. Typically, you have an insurance policy that will require you to pay the first part of a bill, say $25 – $500. The heath care insurance picks up the balance, so long as the treatment is determined to be medically necessary. In some case, after you are admitted to a hospital, a doctor must determine if it is medically necessary for you to stay. Each day a decision is made for the following day. If you are able to transition on, and you want to stay, then a Nurse Case Manager will discuss your situation with the insurance company, and if the insurance company decides they will not pay, the financial burden shifts to you as the patient.
If the insurer decides they will not pay, you do have many options. First, you should look into the decision and in many states just as there are consumer protection laws, there are mirror laws specific to the regulation of insurance and fraudulent and deceptive denials of coverage. For example, in Massachusetts, M.G.L. 176(D).
If it is determined that the denial was proper, or you simply did not have coverage, you may want to consider the following solutions to the medical debt:
- Evaluate all the insurance, Medicaid, and charity options available to you.
- It’s is very common to find double billings and errors on health care invoices. Take the time to closely review each of your bills and challenge any costs that you feel are incorrect.
- File a Bankruptcy to discharge your obligation to pay back all unsecured debt.
- Pay the bill with third party funds or a credit card. The problem is that you are going to incur interest on the debt higher then the bill itself.
- Negotiate with the Creditor and enter into a payment plan
- Settle the Debt with the creditor for less then full amount, and then negotiate a release of liability
The bottom line is that even if you have a massive medical bill, do not panic, there are solutions and opportunities out there for you. Your first step is to get all the facts, and then speak to a consumer debt advocate who may be able to direct appropriately.
