I'm 19 with $115,000 in Debt

Summary

Podcast Summary: "I'm 19 with $115,000 in Debt" The Ramsey Show Highlights Release Date: February 7, 2025

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Introduction

In the February 7, 2025 episode of The Ramsey Show Highlights, the Ramsey Network addresses a pressing financial dilemma faced by a young individual grappling with substantial debt following a severe accident. Hosted by experts including Dave Ramsey, Ken Coleman, Rachel Cruze, Dr. John Delony, George Kamel, and Jade Warshaw, the episode delves into the complexities of managing unexpected medical expenses and debt at a young age.

Caller’s Predicament

At the heart of the discussion is a 19-year-old individual (referred to as "A") who has accumulated $115,000 in medical debt following a catastrophic car crash three months prior to the call.

• Accident Details:
  • Timeline: Occurred three months ago at approximately 60 miles per hour.
  • Injuries: Broke both legs, necessitating a week or two of hospitalization.
  • Employment Impact: Inability to work for the past three months with doctors projecting a recovery period extending one to two years, particularly preventing a return to construction work.

“A: I'm $115,000 in medical debt as of right now, and I'm 19 years old.” [00:02]

Financial Breakdown and Debt Implications

The caller explains the absence of medical insurance at the time of the accident, which exacerbates the financial burden.

• Living Situation: Initially lived independently in a travel trailer to minimize expenses but has since moved back with their mother during recovery.

“A: No, ma'am. I was living on my own in a travel trailer because, you know, it's the cheapest thing you can live in as a young teenager. But now I am. My awesome mother is taking care of me while I'm recovering.” [01:53]

Options for Managing Debt

The caller presents two primary options for addressing the $115,000 debt:

1. Settlement Negotiation: Attempting to negotiate a reduced settlement, potentially reducing the debt to between $60,000 and $80,000.
2. Non-Payment Consequences: Choosing not to pay, which would negatively impact their credit score and lead to debt collection activities.

“A: There are two options of how to handle the $115,000 of debt that I'm in. And it's to either, you know, counter them and say that I'm not going to pay it and agree on a lower settlement of, you know, 60 to 80,000 or whatever, or to just not pay it and let it really, you know, hit my credit score and let the credit score drop.” [01:09]

Expert Advice and Recommendations

Jade Warshaw and Ken Coleman provide guidance on navigating these options:

• Negotiating with Creditors:

  • Warshaw: Emphasizes the importance of not intentionally damaging one’s credit score, suggesting a cautious approach to debt negotiation.

    “B: I think that if it comes to that, that's okay. But I would not intentionally tank my credit...” [03:04]

  • Coleman: Advocates for reaching out to the hospital to discuss a hardship payment plan, leveraging the caller’s current inability to work.

    “C: ... go to the hospital and saying, hey, obviously this is the extent of my injuries... Is there some sort of payment plan I can work out that takes into account my hardship right now?” [04:13]

• Maintaining a Positive Mindset:

  • Warshaw: Encourages the caller to maintain hope and seek feasible solutions without succumbing to despair.

    “B: ... I don't want you to go into this with a hopeless mindset of saying I'll never be able to pay this off because I don't believe that. I think you can.” [04:20]

• Future Income Prospects:

  • The caller discusses a potential future employment opportunity through their father in the oil field, which could provide a more stable income to manage and eventually pay off the debt.

    “A: ... through my dad... a desk job out there that would pay better than construction... that was the plan either way.” [03:04]

Key Takeaways and Conclusion

The episode underscores the importance of proactive communication with creditors and exploring all available options to manage debt, especially in unforeseen circumstances such as medical emergencies. The experts collectively advocate for negotiating payment plans that reflect the caller’s current financial hardship while maintaining a focus on future income prospects to ensure long-term financial stability.

Final Advice:

• Engage with Creditors: Don't avoid the debt; instead, communicate openly about your situation to potentially negotiate more manageable payment terms.
• Maintain Hope and Positivity: Believe in your ability to recover and manage the debt over time, leveraging future income opportunities.
• Seek Professional Guidance: Consider consulting financial advisors or utilizing resources like Y Refi for refinancing options tailored to delinquent private student loans and similar debts.

“A: I think you can pay that off... as soon as you can get healthy, yeah man, you're getting out the Midland and man you're a young Billy Bob Thornton out there.” [04:43]

This episode serves as a crucial resource for young individuals facing significant debt due to unforeseen circumstances, providing both empathy and practical strategies to navigate financial challenges.

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Notable Quotes:

• A (Caller): “I'm $115,000 in medical debt as of right now, and I'm 19 years old.” [00:02]
• B: “I think you can.” [04:20]
• C: “...Is there some sort of payment plan I can work out that takes into account my hardship right now?” [04:13]

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For more insights and daily doses of life and money advice, tune into The Ramsey Show Highlights, available seven days a week through the Ramsey Network.

Transcript

[A]

Brought to you by Y Refi Refinance your defaulted private student loans [e-mail] Ramsey I'm $115,000 in medical debt as of right now, and I'm 19 years old.

[B]

Oh, man.

[C]

What happened? Give us the quick version of what.

[A]

Happened three months ago. I got into a high crash or a car crash at about 60 miles an hour, broke both my legs and had to spend a week or two in the hospital. And I've been out of work for the last three months.

[C]

What's the status on being able to get back to work?

[A]

I'm just now able to kind of waddle around my house like a penguin. But walking, still not that great right now. And the doctors are kind of telling me that I'm not going to be able to go back to construction for the next year or two at least.

[B]

So is there a. Is there a settlement coming out of this? I mean, were you at fault or are you going to get paid off of this?

[A]

I think I was at fault, if I believe correctly. Yeah.

[B]

Oh, that's tough, my man. That's real tough.

[A]

Yeah. Sorry for interrupting.

[B]

No, go ahead.

[A]

Well, my question was, is that at 19, I've kind of been given two options of how to handle the $115,000 of debt that I'm in. And it's to either, you know, counter them and say that I'm not going to pay it and agree on a lower settlement of, you know, 60 to 80,000 or whatever, or to just not pay it and let it really, you know, hit my credit score and let the credit score drop. And I don't know which of those choices to go with at this point because I've never had to use my credit, and I don't think I will in the next seven years. Well, again, I don't want to be straddled with that debt.

[B]

Tell me about. Were you on it? Did you not have medical insurance at the time? Tell me more about that, because what I'm thinking, no medical insurance.

[A]

No, ma'am.

[C]

Do you live at home?

[A]

I was living on my own in a travel trailer because, you know, it's the cheapest thing you can live in as a young teenager. But now I am. My awesome mother is taking care of me while I'm recovering.

[B]

So the truth is, if you don't pay these, they would roll into collections, and some collections agency would end up buying them for pennies on the dollar. And the truth is, when things go into collection, you. Yeah, you. You're more likely to be Able to strike some sort of deal and say, okay, I can pay you. If it's 115,000, I can pay you 40,000, or I can pay you 60,000. And it's usually a cash deal. I don't like that for you because a. Like you said, you're tanking your credit. And it's kind of. It just feels like a hopeless thing. What I would do is I would start with, okay, is there any type of payment plan I can be on? And there's probably some sort of. I don't want to say the term forbearance, but you know, when you're going through a hard time and they kind of give you a break there until you can start working again. Because the truth is, you're not able to work at this point. And we have to figure out what that means for you next, right?

[A]

Yes, ma'am. I'm. I'm hoping to be able. I kind of, through my dad. My dad's an oil field man, and he. There was a plan for me to move out to the oil field and get kind of a desk job out there that would pay better than construction and allow me to work, you know, while sitting down. And that was the plan moving forward. If I was going to be, you know, paying this off, that was the plan either way. But that was kind of my only way in my mind of, yeah, when.

[C]

Is that going to happen?

[A]

Pay this off.

[C]

When are you going to take that job?

[A]

As soon as I can walk again and get my. My trailer moved out to Midland.

[C]

Fantastic. Okay. So there. There's income, and I think Jade's right. You call the hospital, get a hardship.

[B]

Or something, and you talk to him.

[C]

About what you'd like to do and if you can, for Jade, what do you think about his initial idea of settling for a much lower number?

[B]

I think that if it comes to that, that's okay. But I would not intentionally tank my credit. Like, I would not intentionally not make the payments to tank my credit so that it gets sold off. I wouldn't do that if that happened because of circumstances that you couldn't help, which happens every time, and people call in, fine.

[C]

That was his second option. His first option was going to the hospital and saying, look, I just. I. I don't know if I'll ever be able to pay that back. Can we do a lower number?

[B]

Yeah. Yeah. Okay. I do like the idea of you going to the hospital and saying, hey, obviously this is the extent of my injuries. Obviously, I did not have insurance. Obviously, it's going to take me some time. Is there some sort of payment plan I can work out that takes into account my hardship right now? Yeah, and I think they will do that But I don't want you to go into this with a hopeless mindset of saying I'll never be able to pay this off because I don't believe that. I think you can.

[C]

Yeah, I agree. I think you tell them, look I'm 19 year old kid, I didn't have insurance. Here's why. Tell them your story. Yeah and if you could get it to 60, that's a number you threw out that's very doable for you to pay that off but as soon as you can get healthy, yeah man, you're getting out the Midland and man you're a young Billy Bob Thornton out there.

[A]

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