There is an old saying that you get out of a hole the same way that you got into it, one shovel at a time. It is an interesting concept.
Believe me I understand what that may have meant a long time ago. You borrowed a little here and you borrowed a little there, and then you paid back the same way, a little bit each month, and you made baby steps to catch up. That may have worked great at one time and may still work in certain situations.
Let’s say you are a normal American couple who borrows $10,000.00 from your parents at say 5% interest. If it is simple interest I figure you will owe say $500 per year for interest for that first year. I could be way off on all of these figures but the point I am driving at remains the same. So let’s say you pay off that debt at $250.00 per month. After the first year you have paid a total of $3,000.00. So $500 to interest and $2500 to debt means you are 1/4 of the way paid off. With the same payments after a year you are more than 1/2 way to paying off your debt, and with less than 4 years of payments you are all paid off. Everyone is happy and proud.
Okay, let’s say you have the same debt with 18% interest, like some credit card debt. With that same debt of $10,000, you pay $250 per month or $3,000 per year and the first year $1,800 goes to interest. So you are only $1200 paid if you are lucky, as simple interest is probably NOT what we are talking about here. With simple interest, Google at www.1728.org/calcloan.htm tells me that you will have at least 5.1 years to pay that off. That seems low to me but even if it is not right but close, we are talking about something that MAY be doable. The math is giving me a headache but stay with me on this.
I had a nice older couple come in to see me lately and the husband looked pretty ill. He is recovering from cancer. They now have an $80,000 medical bill. They believe that medicaid or medicare will cover it. They have lost their home because of this bill to the government they think. If this is all true it is disturbing on many levels, but apparently they do not have to pay the $80,000 due to being old and having those extra senior benefits.
Yet, if you are a normal working American couple and you get that same $80,000 medical bill how do you pay it back? At 8 times our previous $10,000 example, could you pay $2,000 per month toward that bill? Or, Google tells me that $1,000 per month for 9.1 years pays the bill. Is that going to work?
Okay, if you get stuck with a huge medical bill, there may be no way you can shovel out of this hole. You would end up shoveling all the way to China with that debt. You need a bulldozer to fill in that debt hole. The BULLDOZER is bankruptcy.
Do NOT kick yourself. When the shareholders of BIG MEDICINE and BIG PHARMA take their profits they do it from increased medical expenses and increased presciption drug costs. It is not an accident that as medical costs go up so do the profits of these companies. They can slide, dodge and obfuscate all they want but we are not stupid. They make more money as your bills go into the stratosphere. Poor mouthing only goes so far. They are either paying their executives millions every year or they are not. And they are.
Now, where in this computation is YOUR MORALITY involved? Why are you a BAD GUY when you cannot possibly pay this debt? That is patently ridiculous. What, you are a bad guy to want medical care to stay alive AND you want to keep your home? Sort of like they get to do in other civilized countries? Bankruptcy is available to make this right again. Take the bankruptcy bulldozer and do some shoving of your own.