How To Pay Off Your Medical Debt?

Wondering how to pay off your Medical Debt? Keep reading!

Even if you have good health insurance, a costly medical procedure can encumber you with a substantial amount of medical debt.

How To Pay Off Your Medical Debt?

According to LendingTree, 6% of U.S. adults owe more than $1,000 in medical debt.

If you have an emergency fund or other savings you would be fine, if not, you may need to negotiate with your medical provider, or your bill will be sent to collections.

Paying off medical debt is not as easy as resolving other forms of debt, in which there’s generally more room to negotiate the terms of the loan repayment and even reduce the original amount you owe.

In this guide, we’ll be talking about what is medical debt and how you can pay it back. Let’s get started!

Key Takeaways

  • Medical debts are not that damaging to your credit score.
  • Credit bureaus are not allowed to out your medical debt on your credit score unless it has remained unpaid for six months.
  • To pay off your medical debt, you can use a Credit Card, hire a medical debt advocate, look into assistance policies, and more.

What Is A Medical Debt? 

What Is A Medical Debt

Medical debt is money that you owe in the form of medical bills to the health care provider who treats you in case of an illness or injury.

It is different from other types of debts as it concerns unforeseen health circumstances that are out of your control.

If a person does not pay a medical bill, the care provider will either try to collect it personally or turn it to the third-party collection debt collectors or credit bureaus, who will continuously contact you through calls or emails to get the payment.

Unlike other debts, medical debts are not that damaging to your credit score, as federal law restricts the credit bureaus from putting your medical debt on your credit report unless it has remained unpaid for six-months. 1

Read: What Is Debt Management?

How To Pay Off Your Medial Debt?

How To Pay Off Your Medial Debt

Hospitals and health care providers are often willing to reduce the amount of the original debt you owe if you prove that you cannot afford to pay the debt in full.

You can explain your financial situation to the hospital or your doctor and try to negotiate a payment plan or price you can afford.

Here are some tips that will help you pay off your medical debt. 

  • Create a Budget 

The first and most important thing is to make a budget and factor your medical debt into it. Keep track of where you spend your money, try to cut off unnecessary expenses, and modify your budget to include your monthly repayments. 

  • Try to Negotiate

Contact your doctor or the hospital and try to settle the debt for less than what you owed. Ask them to reduce the amount or arrange affordable monthly installments until you have paid the debt off.

Your options depend on your financial situation, insurance company, and the hospital that has provided the medical treatment. 

How to negotiate medical bills?

  • Pay High-Interest Debts First

List all your debts from the smallest to the largest and start paying with the debts with the highest interest rates.

The longer the interest rate accrues on your balance, the more you’ll have to pay. It is known as the debt avalanche method of debt repayment and helps in debt reduction. 

  • Look into Assistance Policies

Doctors often offer a discount to uninsured patients if you pay in cash.

In addition, some hospitals have funds set aside for people who can afford to pay medical bills or qualify for other types of assistance.

If you qualify for this assistance, your medical debt might be cut in half or forgiven completely. 

  • Hire A Medical Debt Advocate 

If you don’t feel comfortable negotiating on your own, you can hire a non-profit medical advocate to negotiate on your behalf.

Medical advocates understand the system and can settle the matter in your best interest. 

  • Use a Credit Card 

So we do not recommend putting your medical bill on a credit card, as it will shift your bills from a lower interest rate to a high-cost form of debt.

However, if you can quickly pay the debt off, you can consider this option as the last resort of the last resort. 

  • Get a personal loan

This could be your last resort for dealing with medical debt. If you have a good credit history, then you can apply for a personal loan.

A personal loan will not make you debt free, but it will give you money to deal with your existing high-interest medical debt.

Another good thing about personal loans is that the interest rate on it usually lower, so you will definitely end up saving a lot on the interest amount. 2

What Not To Do With Your Medical Debt?

What Should You Not Do With Your Medical Debt

We have shared with you what you can do to deal with your medical debt, but you should also know what you shouldn’t.

Some might be tempted to look for a quick fix or to ignore the medical all together. But you should never do this. Ignoring your medical debts and not paying the bills on time can damage your credit score.

Another example of how you can get into a worse situation is by putting your medical debt on your credit card bill.

This step will definitely placate your doctors, but you will have to bear a very high-interest rate, pushing you further into debt. 3

Ways To Deal With a Medical Debt Collectors

Can Medical Debt Affect My Credit Score?

Can Medical Debt Affect My Credit Score

Medical bills are not shown in your credit report until they go into collections.

And even if they go into collections, all three credit reporting agencies do not show it in your report until it has been more than 365 days past due.

The time that you get here can be utilized to sort out any debt disputes and to make your payments.

If you do not pay your medical debt within 365 days of going into the collection, then it will be put in your credit report and will remain there for seven years.

On the other hand, there would be no mention of the medical bill on your credit report if you pay it. 4

How To Cancel Medical Debt?

Who Is Responsible To Pay Off the Medical Debt of a Person Who Dies?

You might be faced with a situation where you would wonder what happens to the medical debt of a person who has died. Who would pay it off, etc.?

Well, depending on where you live, the medical debt of a deceased person is taken care of by his or her estate.

However, here are a few conditions under which you might be the one to bear the debt:

  • If you shared a joint account with the deceased person (e.g., credit card).
  • You co-owned a property with the deceased. (different for each state.)
  • You cosigned or were the guarantor of a loan with the deceased.
  • You live in a community property state. 5

Wrapping Up

Medical debt is one of the biggest reasons for debt in America. No matter what kind of debt you have, being in this situation is never good and only brings stress.

Making good financial decisions, using credit cards less, and being aware of your spending habits can save you from getting into debt.

As far as medical debts go, you should have an emergency fund ready that will help you in getting into such a nasty situation.

Also, if you think you cannot afford a certain treatment before it begins, try and negotiate the amount. There are always ways to get around these situations.

Lastly, we hope this guide on how to pay off your medical debt helped those facing this situation currently.

People Also Ask For

Is there any minimum monthly payment on medical debt?

There is no standard set monthly payment that one needs to make towards their medical debts.

The number of monthly payments you make depends on how much money you owe and how much you and your medical provider have agreed to settle for.

Ideally, the payment you make should be large enough to repay the medical debt in a decent period of time and small enough not to hamper your other household expenses. 6

Are medical credit cards any good?

Medical credit cards might be good for medical providers, but for patients, it is not ideal.

This is because there is a lot of restriction on how and when you can use a medical credit card, and besides, the interest rate it incurs is hefty.

Is it possible to negotiate medical bills beforehand?

Yes, in some cases, except for emergency or unexpected procedures, you can negotiate medical bills before the service has been carried out.

For this, you can ask the provider to offer you a discount in case you cannot afford the fees. 7

Do medical debts qualify for bankcruptcy?

No, medical debt does not get qualified for bankruptcy even though it is the major reason that leads people to it.

According to research, around 67% of those who filed for bankruptcy did so because of medical debt.

However, you do not get to pick which of your debt will get erased; that is done by the court.

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