I have terminal cancer and an expensive car loan — how do I manage my finances in light of my health challenges?

How to cope with debt after a serious medical diagnosis

When you have a major health issue and serious debt, your first recourse should be to tally what debts you have, so you have a clear picture of your total amounts owing.

You may also consider consolidating your debt, so you’re thinking about a single payment, and not multiple debts. Contact your creditors and discuss whether you can create a payment plan or settle your debt for less than you owe, given the circumstances.

Of course, the options that are open to you are options that exist for any individual who is trying to navigate debt. But because of your unique circumstances, there are also additional paths you may want to consider.

Many lenders are willing to work with borrowers if they feel reasonably confident that those borrowers can't pay off the bills — and this sounds reasonable if you’ll be focusing on chemotherapy or other treatments and won’t be working fulltime (or at all) for the foreseeable future.

If you explain to the lender what you can reasonably afford, they may be able to either accept these terms and allow you to keep the car or, more likely, arrange for a voluntary surrender of the vehicle. However, you will want to make sure you get an agreement in writing in which the lender agrees not to pursue a deficiency judgment or to pursue legal action in an effort to reclaim the difference between what the car sells for and what you owe.

You also have the option to file for bankruptcy, which could allow you to both eliminate your car loan balance and deal with any additional medical debt that you may incur during your treatment.

The National Institute of Health reports bankruptcy remains very common despite the passage of the Affordable Care Act, so you may want to wait as long as you can to see what unpaid medical costs you experience before filing, if you go this route.

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How to shore up your finances when coping with medical issues

As you move through your treatment and look for ways to manage your debt, it's also worth taking some key steps to shore up your finances, if you can afford it — either for your own future or to protect your loved ones if the worst occurs. Either way, if you haven’t been able to do so by now, you’ll want to ensure your financial affairs are in order.

One of the first steps you should take is to create a financial power of attorney. This means you designate someone who can take control of managing your money in case you become unable to do so during the course of your treatment.

By naming an agent to act on your behalf, you get to control who manages your assets instead of your family having to potentially go to court and get a guardian appointed — which could be expensive and result in someone you wouldn't have selected.

It's also worth exploring whether you have disability insurance in place, or life insurance that has a rider that allows you to access funds early in case of a serious illness. These types of policies can provide access to much-needed funding during this time.

Applying for Social Security Disability Insurance (SSDI) benefits is also worthwhile to get an income source, as these benefits can pay a portion of what you were earning if you have a terminal illness or one likely to last at least 12 months.

Certain types of brain cancer are included on Social Security's "Compassionate Allowance List," which means getting approved for benefits should be faster and more streamlined than it is for those following the traditional channels.

As you adjust to your new reality, you should make a budget that allows you to live on the income you will have during your illness. You may also want to begin saving for an emergency fund, if you don't already have one, as you may need to rely upon it at some point during your treatment.

Thinking about finances may feel daunting during a time when you’re most worried about health. Luckily, you don’t have to do it alone. If you need additional guidance, a financial advisor can help, or there may be local nonprofit groups in your area that assist people coping with medical needs to get their finances in order.

Ask your care provider if they know of any of these types of support, as cancer care often involves getting extra help from social workers and other professionals to help you cope with the added strains you may be facing.