How to Get Rid of Medical Debt?

how to get rid of medical debt

When people talk about the healthcare crisis, they not only discuss the high cost of medical treatment but also the growing issue of medical debt. Medical debt can be a considerable burden leading to long-term and enduring financial hardship if you don't learn how to manage it.

Fortunately, there are multiple ways that can help you eliminate it and secure a better financial situation.

In this blog post, we'll discuss some practical and valuable tips to help you recover from expensive medical debt and get back on your feet.

If you're ready to start tackling your medical debt, keep reading.


Medical Debt Statistics in the Nation

People buried in medical debt often refuse to seek financial assistance out of shame or fear of being judged. Contrary to popular and personal belief, medical debt is a shared burden by over 100 million adults nationwide, as reported by CNBC.

This report shows that almost 12% of the total number reported have an outstanding debt of over $10,000. A large group (22%) of this population owes around $1,000 to $2,500 in medical debt.

The medical debt problem in America is a growing dilemma without any foreseeable resolution in the near future. The effects of medical debt severely affect the daily living quality of those affected.

According to Kaiser Health News, 63% of the affected adults have to cut down on essential spending such as food allowance, clothing, and other necessities.

Furthermore, over 48% have exhausted their emergency savings fund, and 40% resorted to taking extra work to pay their medical debt.

Here's the rest of the list for your reference:

  • 28% delay in buying properties or continuing education;
  • 24% reached out to non-profit charities;
  • 19% changed their living situation; and
  • 17% declared bankruptcy.


Most Common Reasons for Collecting Medical Debt

Medical debts pile up for many reasons. We listed some of the most commonly attributed factors to why many people succumb to medical debt.


Lack of Comprehensive Insurance Coverage

Insurance coverage is everything when it comes to getting the medical attention you need. Unfortunately, not everyone has access to comprehensive coverage, leaving them at the mercy of expensive hospital bills. Some people with existing insurance coverage do not cover critical treatments.

Primary medical insurance coverage usually includes preventative care, doctor's visits, and hospitalization. But if you need any specialist advice or surgery, the bill amount could start rising.


Unexpected Life Events

Unforeseen life events, such as accidents, severe illnesses, unexpected pregnancies, and deaths of the family's primary provider, can contribute to medical debt. Such events can drive up the amount of the medical bill to a point where it becomes difficult to cover.


Excessively Expensive Medical Bills

In some cases, medical bills are simply too expensive for the patient means. Treatment for chronic illnesses such as cancer and diabetes can be costly, even if you have insurance that covers these diseases.


How to Clear Your Medical Debt

Clearing your medical debt is not an easy task, but there are some measures you can take to help lessen the burden and slowly but surely eliminate it.


1. Verify the Existing Debt

One of the first things you want to do is to get a copy of your medical records and bills. They should contain a comprehensive list of treatments you received, cost-sharing responsibility, and bills to pay.

Check for discrepancies between your doctor's bills and the insurance company's explanation of benefits (EOB). You can always verify any unusual inconsistencies with the insurance company to ensure you pay the correct amount.

Verifying your existing debt with your medical provider helps with two things:

  1. Confirm the debt DOES exist; and
  2. Make sure you get the exact amount of debt for you to pay.

This eliminates the guesswork of how much you owe and gives you a definite starting point.


2. Try Negotiating First

Once you verify the existence of your debt, the next step is negotiating with your creditors. Remember that collectors are very open to negotiation and compromise, so don't be afraid to ask for a reduction or adjustment in your medical bill.

The key here is to remain calm and level-headed throughout the process. Explain that you're doing your best to settle the debt but that its amount is too much for you to handle all at once.

Your medical provider may offer a reasonable repayment plan, reduced fee, or even forgiveness of part of the debt if your situation necessitates it. Don't hesitate to ask and take advantage of these options if available.


3. Ask for a Realistic Repayment Plan

Continuing with the tip above, you can ask for a structured repayment plan if your creditor is open to negotiations. This could involve paying a certain amount monthly for a set period or stretching the repayment over a longer duration with smaller payments.

A realistic payment plan will make it easier to pay off your debt while still being able to manage your other financial obligations. What's essential for these creditors is that they get paid, so they may be willing to work with you on a plan that fits your budget and timeline.


4. Try To Look for Medical Debt Assistance Programs

Many people overlook medical debt assistance or charitable programs, but these can be immensely helpful in bringing down the bill and giving you more breathing room to pay off your medical debt.

Some states may have government-supported programs that assist those with medical debt, while other organizations provide grants and resources to help those in need. Research the available options to see what is available in your area, and don't hesitate to reach out for assistance.

The people behind these programs understand that financial hardship can occur unexpectedly and are more than willing to assist in getting you back on your feet.


5. Sort and Prioritize Your Debt

Another tip that could help you eliminate medical debt is to sort and prioritize your payments. This means that you should acknowledge your existing medical debt and other essential financial obligations and then prioritize the one you must pay first.

You can employ various financial strategies here to help you determine which debt to tackle first. Ultimately, the goal here is to remain consistent with the repayment term you worked out with your creditor without sacrificing other essential expenses.


6. Don't Rely on Credit Cards to Pay Your Medical Debt

If you've been searching online for tips and tricks on clearing your medical debt, chances are you've come across the advice to use your credit card. However, this isn't always advisable, as you're likely to get stuck in a cycle of debt when relying on credit cards to pay medical bills.

Paying your medical debt with a credit card is only recommended if you can pay it off quickly. Otherwise, you'll likely drown from the high-interest rates, compounded debt, and eventual default.


7. Consider Other Loan Options

If you cannot pay your medical debt all at once, another option is to take out a loan that could help you settle the bill for good. Various banks and online lenders offer personal loans and credit cards specifically designed for those with medical debt.

Not only do these loans come with more flexible repayment plans, but they also offer lower interest rates that could make settling the debt much more manageable. Although paying a debt with a loan sounds counterintuitive, it could be the only way to get back on your feet financially.


8. Get Professional Help

Getting expert insight and advice from a reputable debt-relief organization is also a guaranteed way of getting rid of medical debt. These organizations have experience working with creditors and can help you navigate the negotiation process to get your bills reduced or cleared entirely.

Plus, they understand the financial burden of medical debts and are more than willing to lend a hand. Don't hesitate to seek professional help if you feel overwhelmed by your medical debt.


9 Declare Bankruptcy as Your Last Resort

If it all boils down to it, and you can't find any other option to pay off your medical debt, you should consider bankruptcy. This is a serious decision and should only be taken as a last resort when all else fails, and you've sought expert advice.

Declaring bankruptcy forgives most of your existing debts, including medical debts. It's crucial to remember that bankruptcy appears in your credit report for about ten years, which could hurt your future opportunities to obtain a loan.


Medical Bills to Debt: The Lifecycle of Outstanding Medical Balance

A medical bill becomes a debt if you fail to meet your financial obligations on time. The lifecycle of this process is as follows:

  1. Unpaid medical bill: A medical debt starts as an outstanding medical visit or treatment.
  2. The unpaid medical bill is passed the due date: Once you have incurred an unpaid medical bill, the hospital will set a due date when you must complete the payment. If you fail to meet this, the medical provider will consider this as debt.
  3. Medical debt in collections: The provider or creditor will try to collect payment from you directly or via a third-party debt collector or collection agency. They may also sell your debt to a debt buyer for a fraction of your total debt amount.
  4. Filing the debt to your credit report: If you haven't made any payments to your debt, the debt buyer, medical provider, or debt collector will report your debt to a credit bureau. This makes your medical debt appear on your credit history and hurts your credit score.


How Does a Medical Debt Affect Your Credit Score?

Before, medical debt could sit in your credit history for up to seven years. However, as of July 1, major credit bureaus will remove your medical debt from your credit report once you've paid it off completely.

The CEOs of major credit bureaus, Equifax, Experian, and TransUnion, have this to say:


“These changes will realign our approach to medical collection debt reporting in a manner that is designed to help consumers focus on their personal well-being.” 


This makes it easier for you to get loan opportunities without receiving rejections for your past medical debt. Formerly, government loan opportunities and other loan providers relied heavily on credit reports before granting loans.


Will Medical Debt Be Forgiven?

Unfortunately, medical debts are not easily forgiven. However, you can request debt cancellation by offering a repayment plan or proving financial hardship to creditors.

Additionally, some hospitals offer various financial forgiveness programs backed by state government efforts, so it's worth looking into your options. You may also seek help from non-profit organizations specializing in debt forgiveness.


Can You Get Sued for a Medical Debt?

Yes, you can get sued for medical debt. Sometimes, the creditor or provider may decide to take legal action against you to recover the money they lost.

However, this doesn't mean you have no available legal recourse on your end. You can work with a lawyer to help you fight debt collectors in court or settle the debt through negotiation.


Let's Round It Up

Medical debts are no joke, and they can quickly pile up if you don't take the proper steps to address them early on. Avoiding medical bills won't make your debt disappear; instead, it will only worsen the situation.

Understanding what options are feasible to help you get out of medical debts is a great way to stay on top of your payments and ensure that the debt doesn't drag on for too long. From reaching out to non-profit organizations to declaring bankruptcy, it's important to remember that you have a wealth of options available.

Now, it's up to you to start working towards clearing your name of medical debt. You can always start by verifying the debt's accuracy, finding your legal rights, and discussing repayment options with your creditors.

If you're looking for loan options to settle your medical debt, our expert team of financial advisors at 121 Financial Credit Union can help. From small loans to low-interest credit cards and other loan opportunities, our team works hard to find the best deal for you.

Contact us today to learn more about your options and start working towards a brighter financial future!

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