Should you worry about medical debt?

Medical debt is different from other types of consumer debt. Unlike mortgages and credit card payments, medical debt is usually unplanned. You can’t predict a heart attack, nor can you shop around for the best deal on an emergency procedure. Medical debt happens quickly, then snowballs. Patients can easily end up in court, defending themselves against doctors’ lawsuits.

In other ways, though, medical debt is just like any other debt. It can ruin your credit score, making it impossible for you to borrow money. It can keep you from getting health insurance. In extreme cases, it can even lead to bankruptcy.

Video: How to negotiate medical bills

Can you settle medical debt?

If you cannot afford to pay your hospital bills, you may be able to reduce the amount you owe through debt settlement. With debt settlement, you negotiate with the creditor to reduce your balance and agree on a payment plan that suits both parties. You can save as much as 60% and avoid bankruptcy. Negotiating with a hospital or a doctor is often easier than negotiating with another type of lender. They may be more sympathetic to your situation and more reluctant to take you to court. They also have more to lose if you default on your bill.

The benefits of medical debt settlement

Once you consider the alternative, the benefits of medical debt settlement are clear. Chapter 7 bankruptcy is much more damaging to your credit score. It stays on your credit report for up to 10 years and you may lose all of your assets and have to start from scratch. In comparison, debt settlement is a much better option.

Medical debt settlement companies

There are thousands of debt settlement companies that will handle the paperwork and the negotiations for you. They will review your medical bills, checking for costly errors. They will then contact your creditors and try to negotiate a reasonable payment plan.

These companies are experts at dealing with hospitals, billing agencies and debt collectors. They know the law. They also know how much of your debt can be forgiven. However, their services come at a cost. And if you’re struggling financially, you may want to consider going the DIY route.

Video: Professional Negotiators can reduce medical bills significantly

DIY medical debt settlement

Not everyone can handle do-it-yourself debt settlement. The process can be very intimidating. But if you’re brave enough to give it a go, it can save you a lot of money.

The first thing you will need to do is to find out exactly how much you owe and to whom. You can get a full itemized bill from the hospital or doctor’s practice. Check that every charge is correct. There’s a good chance that there will be some inaccuracies. Insurance companies don’t have the time to deal with each one, but if you’re paying the bill yourself, it pays to scrutinize.

Next, figure out how much of the bill you can afford to pay. Be realistic. They creditor will not forgive 90% of your debt unless they have no hope of getting that money.

Once you’ve come up with a number, contact whoever owns your debt—it may be the hospital or a third-party debt collection agency—and try to negotiate with them to reduce your balance. There is a good chance that they will agree to your proposal.

Getting government help

If you’re unsuccessful at debt settlement, there’s another way to pay off your medical debt. There are billions of dollars available in government grants. Some are specific to certain illnesses. Others pay for long or short-term care. Check to see if you qualify.