Critics of medical debt settlement point out that the whole concept of settlement of debt is not based on logic and common sense. To expect any individual or financial institution to offer a waiver ranging from fifty to seventy percent of the original amount owed does not make sense. No person will give such a huge waiver and cause such a huge loss.
This would have been true in the past before the recession hit the economy. However, this argument that does not hold any water today because America has been hit by one of its worst recession in the past seventy years. There are many who call this the worst recession after the Great Depression and there are some who are of the opinion that this is even worse than the Great Depression as well.
The primary reason why such a large number of persons are worried about this recession is the huge number of bankruptcies that took place. The number of bankruptcies can easily be used as the barometer to determine the condition of people in the country. If a large number of persons are declaring bankruptcy, then something is wrong in the way finances are managed in the houses of the country. On the other hand, if majority of individuals are in a position to manage their finances without having recourse something as drastic as bankruptcy, one can be confident that things are going on smoothly.
The recent recession saw a spate of bankruptcies that had not been witnessed in the past few recessions. Further, this recession has been, by far, the longest in recent memory. Considering all this, lenders are well and truly scared of the chances of recovery of their debt. What is going to stop the borrower from simply filing for bankruptcy? It is very pertinent to note that number of bankruptcies as increased despite the two thousand five amendments has made it difficult for the average individual to opt for bankruptcy.
Lenders have realized that it makes more sense to help the borrower out when he or she is facing a legitimate problem. It is possible to behave as if the problem of the borrower is the problem of the borrower alone. However, lenders have realized that their existence too is intertwined with the regular repayment made by the borrower. In case of medical institutions, all these arguments are applicable. That is the reason why the service providers are prepared to offer generous waivers as long as it helps them recover the funds properly.
Source by S. Suresh