1. Student debt: Nondischargeable, as another poster said. The reason why it is nondischargeable is superficially sound --but the result is that people who are in precarious circumstances are now being screwed by an unforgiving rule because a few decades ago a few medical students upon graduation declared bankruptcy notwithstanding that in a few years they would have more than ample means to pay off the debt. Congress overreacted. Bottom line: no one should assume student debt without doing the same cost benefit analysis they do with other kinds of debt. Getting a job, a roommate, living at home, doing two years of community college, etc., etc. are all potentially much more prudent than just financing your education. And if your school has an endowment, for God's sake, negotiate with it about the level of assistance you are being offered, or consider going to a "lesser" institution that gives you more assistance. And look at those trade schools the same way you should have been looking at subprime mortgage lenders. Many of them are complete scams that will take your money and leave you unemployed and unemployable.

2. Medical bills: If at all possible tackle them one at a time and get relief where you can by negotiating with doctors. At the very least, work out a payment plan and ask for the Medicaid rate -- and don't put them on credit cards if you can avoid it, because then your only recourse is with the bank, as the doctor has already been paid. Hospitals have become completely rapacious. Some are under an obligation to provide charity care, so you might qualify for assistance in that way. You can sometimes escalate the situation by calling elected representatives. Short of all that, save your cash and file for bankruptcy. It really is your only recourse.

Anonymous, you would pay a lot more than $300 per month if you didn't have copays. In your case, looking backwards at a large co-insurance responsibility, of course, a higher premium would have made sense, but no one can know that in advance. But we should all recognize the following: most health care costs are driven by health care providers not insurers (not that insurers don't have their faults), and one of the main problems with insurance is that it enables providers (a) to disguise their lack of efficiency and higher costs from their customers and (b) to point the finger at the evil insurers whenever cost is raised. We all want to be friends with our providers. It's understandable since they are largely responsible for our well-being. But medical inflation and punier insurance coverage is a reflection on health care provider inefficiencies more so than insurer profits. They could forego all their profits and your premium would still be unaffordable.

Could you back up your statement that failing to pay a debt is the same as debt forgiveness that constitutes taxable income? Are their IRS opinions that you are relying on? Visa didn't forgive the debt just because it wasn't able to collect it. There was no piece of paper stating satisfaction and accord as a result of a lesser payment (which would constitute debt forgiveness). Not buying it.

Anonymous is correct that illness is not a choice, but ReganaD is correct that health insurance covers much more than expenses associated with illness, including frequently predictable expenses, and preventive care, including, for instance, cholesterol lowering medication (and many other things). Drugs can be antibiotics, directly associated with the treatment of illness, or NSAIDs, to relieve pain but not cure anything.

So the issue becomes: how do you contain this beast? But ReganaD's point is still correct: the beast is fed mostly by health care providers and their related expenses, and not simply profits or administrative expenses of insurers.

This thread reads a lot like debates I've had on the mortgage meltdown: one-half think it's attributable to a bunch of greedy jerks trying to get something for nothing and the other half thinks it's people who were fundamentally unlucky and taken advantage of by credit card companies, hospitals and insurers. IT'S ALL OF THE ABOVE. I can read these things in isolation and agree with all of them -- they are all true at least some of the time. The fundamental problem with bankruptcy law and creditors and credit card companies is that they really don't care about the reason for your distress. Indeed, with some kinds of debt, like student loans, you might have much better reasons for not paying it back than someone has for avoiding credit card debt. Yet, the young mother with a boatload of trade school debt who now has to stay home with a sick child is treated much worse than the deadbeat who maxed out every credit card he has in order to buy five flat screen tvs and anything else he can think of. Bankruptcy is supposed to provide an equitable adjustment of one's debts in light of one's circumstances. But the trend over the last 20 years, at least, has been to be less and less equitable and more and more pro-creditor all the way around. So yes, the writer did basically create her own distress -- which is stupid, because among other things, it makes her much more vulnerable to foreseeable bad luck (downturn in freelance assignments). But there are some kinds of distress that are truly random and not expected that no amount of planning can compensate for. Our laws aren't very good at sorting it all out, and they have become less so with every round of recent bankruptcy reform.