It has become a common norm to have medical debt in this high-cost world. And no need to say that medical debts can be a burden for real. But is there a way for people to get out of their debts easily? Yes! Medical Debt Consolidation.
Medical debt consolidation is truly helpful for all those who struggle with medical debt or multiple medical debts. It can make life much easier for people and combine all their bills into one. In this blog, we will discuss Medical Debt Consolidation, how it works, why it helps, what to watch out for, and share key facts around it.
What Is Medical Debt Consolidation?
Medical debt consolidation refers to taking a new loan that covers all your medical bills at once. Instead of managing many bills from different clinics & doctors, now you pay for one single payment to one lender every month. Notably, it doesn’t remove your debt but transfers it to a single loan. This just makes it easier to handle it.
For example, if someone owes $4000 to the hospital, $2000 to a pharmacy, they can get a loan for $6,000 and use it to pay everyone off. Then, they only repay the lender.
Read more! The True Cost of Care: Navigating Medical Debt in Today’s World
Why So Many Have Medical Debt?
Medical bills have become a big issue lately. In the US alone, people owed $4.7 trillion in Medical bills by the end of 2023, while more than 100 million Americans still had some medical debt.
Many people get medical debt because of emergencies or accidents that are often unpredictable. And most importantly, Hospitals may send separate bills for doctors, medicines, and labs. This makes the whole scenario more complicated for the payer.
Also check The Hidden Cost of Healthcare: Understanding Medical Debt
How Does Debt Consolidation Help?
Medical debt consolidation helps you in several ways:
- It creates one simple monthly payment, instead of many confusing bills.
- Consolidation makes it easier to plan your budget because everything is in one place.
- Sometimes, working with one lender helps you get the lowest interest rate or better payment terms. However, for this, you would need a strong credit score.
- It forbids the stress of missing payments and getting calls from collection agents.
- This often keeps debts from hurting your credit score or any legal trouble or bankruptcy as well.
- In some cases, regular payments on a consolidated loan may also help you improve your credit score.
How to Consolidate Your Medical Debt?
The most common ways to consolidate medical debt are:
- Personal loan from a bank, credit union, or online lender.
- Balance transfer credit card. Here, you move all debt to one card with a lower interest rate.
- Home equity loan (if you own property). You can get it using your house value to get money for paying debts.
- Debt management program managed by a nonprofit counselor.
Tip:
- Before you apply for the consolidation, make sure to add up all your bills.
- Call hospitals and clinics to check if they offer discounts, payment plans, or if they will settle for a lower amount before taking a loan.
Important Things to Think About:
Consolidating medical debt has some drawbacks, too:
- Medical bills don’t have interest. New loans always charge interest fees and may cost more over time.
- Missing a payment can affect your credit score faster due to some special rules for medical debt, such as credit reporting delays.
- Taking a new loan with high interest can be risky. Especially if there is no way to make the payments on time.
- Not all companies are honest. You must check for hidden costs and potential scams.
Alternatives to Debt Consolidation:
Before choosing debt consolidation, you can explore these options as well:
- Talk to the medical providers as doctors and hospitals often have office staff to reduce bills or set up easy payment plans.
- Use help from medical bill advocates or financial counsellors, or find relief programs.
- Check if you qualify for government or private grants, discounts, or debt forgiveness programs.
Key Facts Everyone Should Know About Medical Debt:
- In most countries, medical debt below $500 doesn’t hurt your credit score.
- Credit bureaus wait one year before adding unpaid medical debt to your report.
- Always read loan documents carefully before signing anything. Ask about all fees, hidden costs, penalties, or processing charges.
Conclusion:
Medical debt consolidation is a really useful tool for making your hospital bill simpler. It adds up all your medical bills and turns the confusing, stressful debt into one easier monthly payment. This is especially helpful for those who feel overwhelmed with stacks of bills and constant reminders.
It can bring you peace of mind and help avoid bigger potential issues, such as a legal case. However, it’s not always the best fit. Before you directly jump into Medical debt help consolidation, contact the hospital or clinic staff for any debt relief, or you can also visit an NGO for enrolling in debt relief programs. Choose programs that offer you cheaper or interest-free solutions for all your medical debts.