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Is crowdfunding a good way to deal with medical debt?

Crowdfunding is a popular way to raise money these days as it allows people in Long Island and nationwide to reach out to family, friends or strangers with the help of social networks and the Internet. For example, those who are facing steep medical bills, due to a serious illness or injury, often reach out to others via crowdfunding to raise the money needed to afford their care. However, is crowdfunding the best way to deal with medical debt ?

Perhaps not. According to a NerdWallet analysis, only 11 percent of crowdfunding campaigns for medical debt meet their goals. Moreover, many crowdfunding websites retain a certain percentage of what was raised through their site. Some also charge processing fees.

Even though the Affordable Care Act means that more people have health insurance, a 2015 survey revealed that 26 percent of respondents were facing some sort of financial difficulties due to expenses relating to health care. Though, there are ways to tackle medical debt without crowdfunding.

First, it may help to contact the medical biller before the account goes to collections. In general, a medical bill will not go to collections until it has gone unpaid for about 120 days.

If it goes to collections, it can affect the debtor's credit score. Rather than letting bills languish in collections, it is sometimes better for a person who cannot by any means, meet their debt obligations to file for bankruptcy.

Filing for bankruptcy, whether it is Chapter 7 or Chapter 13 can provide debtors with a way out of debt, so they can start over on a clean financial slate. And, a lawyer may help figure these questions out.

Source: MarketWatch, "Crowdfunding medical bills not best way to raise cash for care," Anna Helhoski, Dec. 27, 2016

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