What can you do when you don’t have health insurance and you can’t pay your medical bills that have been sent to a collections agency?
Well, that’s the question recently fielded by Bankrate.com’s Justin Harelik.
The reader’s mother has been dealing with bills for her open-heart surgery that were sent to collection in 1996! She worked with the collectors to lower the monthly payments to something she could afford on her social security payments, but now the agency is expecting her to pay the full $20,000 outstanding balance. This seems incredibly unfair, since she’s paying them in good faith and they are cashing the checks, but apparently it is perfectly legal for them to do.
Here are the 4 options laid out by Mr. Harelik:
Negotiate a settlement with the collection agency.
The upside: She could get a significant amount of the debt eliminated.
The downside: The agency would likely demand a large lump sum payment that she probably doesn’t have.
File for bankruptcy.
The upside: It would eliminate the debt obligation completely.
The downside: It would cause some damage to her credit history and she may need to hire an attorney, depending on what assets she may have.
Take out a reverse mortgage.
The upside: She gets monthly payments based on the current value of her home, and can make larger payments to the collections agency.
The downside: She would have to own her home outright (with no current mortgage), it could be a costly and time consuming process to put in place to meet the requirements of the collectors. A reverse mortgage would also decrease the amount she could make by selling the property, and leave less to bequeath to relatives upon her death..
Hire a law firm to protect her Social Security checks.
The upside: She doesn’t have to worry about the collection agency placing a levy on her bank account and taking the payments before she has had the chance to spend the money on heat and food bills.
The downside: It will cost a lawyer’s fee and she will still have to make monthly payments to the collection agency to pay off the debt.
Given the list with the pros and cons, it’s easy to see why Mr. Harelik recommended option 4. 
[...] want to try a few things on your own, before contacting a 3rd party for help, you may want to read 4 Options for Bills in Collections, 3 Tips For When Collectors Come Calling, and 7 Ways To Beat Back Debt [...]