Dear Bankruptcy Adviser,
We are contemplating filing for bankruptcy. We had a lot of credit cards, then I lost my job last June, and in order to keep our house and kids fed we neglected our credit cards. My house is more important than those cards were. Now the accounts are all in collection and way too much for us to pay off. Then three of our daughters were hospitalized for a week and those medical bills added up quickly. What are our options? Do we need a lawyer, and if so, what steps do we take first?
— Bryan

Dear Bryan,
I am so sorry to hear about the hospitalization of your daughters. That must have been unbelievably stressful. It is hoped you and your wife are able to maintain a positive household through what appears to be overwhelming conditions.

As I have stated many times, the vast majority of bankruptcy filings are the result of illness, divorce or unemployment. Usually, one of these events is enough to cause a person to seek bankruptcy protection. In your case, you are faced with two of these unfortunate events.

Your medical problems are very difficult to manage because you must continue to get the necessary care for your daughters. While I do not want to advocate intentionally incurring medical debt with no intention of paying, you may simply be in such an untenable position. 

You ought to immediately contact the hospital administrator or billing department to discuss your precarious financial position, express your concern that you cannot pay the bills and work out some arrangement so that you can maintain continuous medical coverage for your daughters.

You should also research local nonprofit organizations that work with people facing insurmountable medical debt. There are organizations that have private or public funds earmarked for people who cannot pay medical bills due to insufficient medical insurance or simply unmanageable co-pay requirements. You should be able to find these organizations through Internet searches or possibly by contacting your local, state or federal congressional representatives.  

At this point, you are correct to conclude that you must ignore the credit card companies so that you can continue to provide food and shelter for your family. There is no value in calling the creditors and explaining your situation. To be blunt, they just don’t care. Each account is in collections and those departments are created for the sole purpose of resolving bad debt. 

While the phone calls may become overwhelming, you also do not want to miss potential employer calls. Answer the phone and state the obvious — that you cannot pay and do not know when you can. If the same calls continue every day and all day long, then you may need to send cease and desist letters.

Finally, you can file bankruptcy without an attorney. While I do not know the success rate of cases filed as such, I do know that in California, about 20 percent of all filed cases are done without legal representation. This can be your only available option as you try to find a new job and care for those more important than your creditors — your family.