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As a result of extreme medical debt, some people are starting to use crowdfunding to try to find financial relief. However, research has shown that only a small percentage of campaigns are completely funded. The act of crowdfunding; seeking donations from friends and family, among others through online campaigns, has risen in popularity over the last few years as an alternative to getting a traditional medical loans which are mostly personal loans. It has been used to help start projects, ventures, and businesses, besides being used as a way to cover different health care costs. While crowdfunding can be beneficial to those with a large network, for the majority of people, crowdfunding is not a real asset in trying to pay off medical debt.
Health care campaigns are the largest segment of crowdfunding, despite the fact that only a small percentage of the campaigns are fully funded. People are then forced to try more traditional ways of dealing with high health care bills, such as negotiating a payment schedule. Some people are even forced to declare bankruptcy. Even if people avoid filing for bankruptcy, their debt could get severe enough that it gets sent to a collection agency. Credit bureaus receive the information about the debt going to collections, which will show up on a credit report, damaging a person’s credit.
Health insurance certainly provides assistance when paying for treatment, and the Affordable Care Act helped provide coverage to people who were uninsured. While medical care is more accessible, people who are covered are struggling to pay their health care bills. Many people have noted that their medical bills are a serious problem. According to multiple surveys, setting up a payment plan is the method most people use to deal with high medical debt.
To deal with mounting bills, people are turning to crowdfunding for small loans to offset healthcare costs. The most common reasons people list for launching crowdfunding campaigns are serious diseases and illnesses, such as cancer. Many campaigns are looking to offset expenses, such as transportation and lost wages. Caregivers may also need financial assistance with living expenses to care for the needs of a loved one who has been diagnosed with a major illness.
Most crowdfunding campaigns are started by friends or family members on behalf of someone else. Research has shown that campaigns have a better chance at being successful when they reach people threw social media. Research has also shown that residents of urban areas are more likely to have successful crowdfunding campaigns because they have a larger community to contact. GiveForward has the highest percentage of medical crowdfunding among the different kinds of campaigns. GiveForward is more successful because the site is primarily devoted to medical campaigns.
The majority of campaigns are set up by people experiencing major life events, opposed to those looking to fund a business project or trip. The majority of popular crowdfunding sites charge a platform and transaction fee. Red Basket, a small crowdfunding site, is the exception due to receiving financial backing from WoodmenLife, a nonprofit insurance company.
Other Ways To Get Rid Of Debt
If the debt becomes overwhelming, declaring bankruptcy is a good option. If you decide to file for bankruptcy, look for an attorney that has experience dealing with cases that are similar to yours. The bankruptcy would get rid of any medical bills and other debt that has been accumulated. Be aware that once your medical bills are sent to collections, your credit report and credit score will be impacted. Declaring bankruptcy can make it difficult for someone to get new credit for the next few years. Once you file for bankruptcy, avoid any credit card offers that you may receive.
Talk To A Professional
If you are unsure about your situation, consult with a financial professional for advice. A credit counseling agency can assess your debt to help you figure out the best course of action to take. A medical billing advocate is another option for you to consider.Once you have paid off your bills, you can rebuild your credit through managing your finances in a responsible way, including paying your bills in a timely manner. Stay updated on all procedures that have been paid for by your insurance company.
Robert is our in-house expert on personal loans and finance. He got an MBA, specializing in Finance, before joining the workforce. After working for multiple Fortune 500 companies in the past decade, he brings a wealth of knowledge and experience to the table.