Medical bills can be very high and are one of the top reasons why people get in trouble with debt. If you’re using a credit card to pay your medical bills, you are at risk for developing some serious financial problems. Illness is an emergency and you should pay for it out from an emergency fund as opposed to putting the expenses on a credit card. Medical debts can easily overwhelm you if you choose to do nothing about them. If you have a lot of medical bills, one good option is to start paying them off through medical debt consolidation. Here are some tips for consolidating medical debts.
Tap into your home equity
If you have equity in your home, you could pay off all your medical bills over a long period of time. The interest you pay while repaying the home equity loan can be deducted from your taxes. This method has a disadvantage as you would be using an asset to secure a debt, which was previously unsecured. If you fail to make payments on a home equity loan your lender could foreclose on it and you’d lose you home. Failure to pay your medical bills can ruin your credit score. Plus, your account could be sold to a collection agency. You will be paying interest on a debt that had not been accruing interest. If you do think you would like a home equity loan to consolidate your medical bills, be sure apply with several different institutions so that you will get a good rate.
If your medical debts have overwhelmed you and you have no way to raise the money you would need to pay them off, you could seek help from a medical debt negotiator. A medical debt negotiator works like a credit counselor. He or she will negotiate on your behalf with your hospital, clinic or doctor to lower your balances. Do careful research before you choose a medical debt negotiator. Check out its fees and services and know your rights. Debt consolidation is ideal for those families who cannot qualify for a governmental grant or debt forgiveness. Remember that it is an unsecured debt and, therefore, has a higher interest rate. You will only benefit if your new payments are lower than the payments you have been making to your creditors.
Take out a medical debt consolidation loan
Search for a lender that provides loans for consumers with large medical bills. If you are unable to negotiate favorable terms with your medical creditors, look for agencies that could help you. Remember that the interest will be higher because a medical debt consolidation loan is an unsecured loan.
Contact the hospital and offer to settle your debt for a given amount of the money. A debt settlement will show up on your credit report though it will show that you were responsible for the debt. It will be indicated in your credit report that you paid off what you owed.
If you are unable to negotiate successfully with your health care providers, you might be able to get help from a consumer credit counseling agency. A credit counselor will review your finances, including your revenues and debts, and help you develop a payment plan and a budget. Your counselor will negotiate with your healthcare creditors for them to accept your plan. If you select this option, you should be out of debt in three to five years and your credit score should not be seriously affected.