What Happens To My Debt if I Become Disabled?

Sometimes debt repayment can be challenging due to financial reasons and it only gets a lot more difficult for those struggling with a disability. Most disabled persons find it quite difficult to settle their loans. The excruciating pain or dysfunction may hinder you from performing tasks to acquire some income and repay your debt.

If you find yourself in this unfortunate situation, there are ways to settle your debt without filing for bankruptcy. Being in debt with a disability is often treated differently from regular debt collections. So as long as your disability prevents you from working effectively, there is always a way out. 

How Can I Earn As A Disabled

People with disabilities often face stronger challenges in acquiring financial stability. Thankfully there is a financial emergency platform that helps those with dysfunction or severe medical conditions. The Social Security Disability Insurance (SSDI) provides an opportunity for those with disabilities who are unable to work to attain enough earnings to pay their taxes or debt. However, you would have to complete certain requirements to qualify for this insurance platform. Some of the details needed include:

  • A medical report in written form stating your condition
  • Completion of several forms to clearly indicate your disability and finances
  • You may need a Disability lawyer to defend your case
  • You must not have a record 

Dealing With Debt As A Disabled

Sometimes in life, we go through unpleasant experiences which are beyond our control. As a disabled person, one thing you should know is that no bank provider or lender is allowed to discriminate against you in your condition. Managing debt with a disability is almost impossible, which is why you need to ensure you get assistance from the right sources. 

Here are a few things you should know as a disabled person struggling with debt repayment.

Avoiding Judgement

Every loan with a monthly payment plan that every borrower must fulfill. Once you exceed the expected payment days by 30 days, lenders have the opportunity to take further action. These actions may lead to a court or a direct meeting with the credit bureau and generate extra punishments for your delinquency. However, you can escape these judgments as a disabled person. Your creditor will be unable to take severe actions such as having liens on your property or adding to your debt payment fee. This is because any of these actions will require your long legal proceedings with little outcome. Therefore, you will most likely not experience any effect on your social security income as it could end up being a waste of time and cost for your creditors.

In a bid to avoid this strenuous process, creditors are usually open to reaching an agreement with the borrower and finding a common ground for repayment.

Cease and Desist

You may experience creditors constantly contacting you to repay your loan especially when it is overdue. However, due to your condition and inability to repay the loan, you can make a move to prevent the collector from pestering you. 

A “Cease and desist” is an action you can take to avoid frequent contact with your collectors. You can either write a letter addressing this issue or directly request them to cease contact. The Fair Debt Collection Practices Act(FDCPA) obligates them to concur to this request. However, you must clearly indicate your reasons for carrying out this action. Failure of creditors to comply with this act is an offense punishable by law. 

Seek Debt Consolidation

As a disabled person in credit card debt, you get a level of leniency that allows you to avoid judgment with a protected income. However, this means that your credit score will bear the effect. The delinquency in your payments will invariably hurt your credit. This is a better punishment as you can work on improving your credit score through credible means. Debt settlement provides a reliable option to erase any item hurting your credit score. By doing this, you will be able to achieve a better credit score to apply for a debt consolidation loan to pay off your current debt. 

Debt consolidation is an excellent way of settling debts especially if you are struggling with a disability. It provides a platform to consolidate credit card debts, auto loans, or mortgage payments into a monthly payment while also getting a lower interest rate. Debt consolidation helps you to avoid being delinquent in your payments so you keep a good credit score. With this plan, you can work on getting a debt relief option that helps protect your credit score.

Hardship Plans

Different debt relief options are open to people with serious or permanent dysfunction. These relief options are financial assistance to clear your debt. A hardship plan is usually available to disabled persons. Most credit card companies prefer a full repayment of debts which isn’t possible in this case. Once your collectors can confirm you possess a serious disability, they may be willing to consider your debt and charge it off. Since you are unable to perform any job to generate income, you can negotiate a lesser monthly payment fee or reduced interest rate. 

Some lenders are usually open to this idea to facilitate a mutual settlement fee which disabled borrowers will find easier to pay. Generally, you can work on getting a lower interest rate or a favorable monthly payment plan as a disabled person. 

To create a hardship plan, you’d have to draft out a list that comprises your regular income and other expenses. This will allow you to have detailed information on your financial stability to present your lender. 

A comprehensive list illustrating your finances should be able to convince your lender to negotiate a more affordable interest rate.  

Most debt collection agencies include a hardship plan in their lender policy to assist those with cases of disability. Some agencies may even offer a cancellation policy that charges off any debt in a situation that involves death or disability. 

Basically, you can negotiate a longer payment period or a better debt plan.  

Make A Budget

Whether or not you are able to negotiate favorable terms, you should make a list that contains your expenses and income. After drafting out a budget list, arrange them based on a scale of preference by prioritizing your most important needs and expenses. If you are unable to work to earn income, you will need to cut down on your spending and work on settling your loans. This will help you pay your debt quickly especially if you can negotiate a lower interest rate. The earlier you start making payments, the better for you. 

File For Bankruptcy

Filing for bankruptcy should be the last resort if you are disabled and struggling with debt payments. Declaring insolvency will free you of your debts but at a cost. You get different outcomes depending on what chapter you state bankruptcy. Each chapter comes with its advantages and disadvantages so you should check out what every chapter contains to have a complete view and understanding. For instance, if you wish to keep your property after filing for bankruptcy then chapter 13 would be a good choice. 


There are several financial programs available to assist disabled people struggling to repay their debts. However, these programs are sometimes not sufficient or easily accessible. Consolidating your debts is one of the surest ways to ensure you get a lower interest rate that favors your payment plan. 

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