A Harvard University research study conducted in 2007 found that 62 percent of all bankruptcies filed were due to overwhelming medical expenses. Most of the debtors were well-educated, middle-class citizens who had health insurance. With the ever-rising costs of health care in America, it is not uncommon to seek help consolidating medical bills. There are a number of things you should consider when you decide to consolidate and eliminate your medical debt.
Loans
Three factors should be taken into account if you are contemplating a personal or home equity loan to pay off medical bills: interest, risk and monthly payments. Consolidating your medical bills through a personal or home equity loan is only worth it if you can get a lower interest rate on a reasonable term. However, since you often do not pay interest on medical bills, by consolidating medical debt through a loan, you will be paying interest. If you are thinking about using the equity in your home, bear in mind you are putting your home at risk if you should default on the loan. Lastly, by acquiring a loan for help consolidating medical bills, you could end up with a higher monthly payment than what you were previously paying the doctors or hospital. Even if your payment is lower, it is likely you will end up paying more than you would have over the life of the loan.
Negotiation
The Patient Advocate Foundation (PAF) is a charitable organization that helps people with debilitating, life-threatening or chronic illnesses to manage health care expenses and issues. PAF may be able to negotiate for you in regard to insurance access concerns, your medical debt crisis and job retention issues. NeedHelpPayingBills.com offers a range of information on state and local assistance programs and credit card and medical debt help. If you do not qualify for help through charities, Medicaid or other assistance programs, you may be able to negotiate with your health care providers to find an acceptable settlement amount for all outstanding balances.
Bankruptcy
When you have exhausted all other options and nothing will work with your current financial situation, filing for bankruptcy protection may be the most effective alternative. Before making a final decision, it would be beneficial to consult with a bankruptcy attorney so you can learn about all consequences involved with filing for bankruptcy. As medical bills are a form of unsecured (no collateral) debt, they can often be partially or completely eliminated in a bankruptcy filing.
Credit Counseling
If you are having difficulty negotiating successfully with your health care providers or sticking to a repayment plan, a credit counseling agency may be able to help. Many credit counselors offer their services in a local office, by telephone or on the Internet, and some organizations work on a nonprofit basis to help consumers manage debt. Credit counseling is designed to help you learn how to better manage your finances, including help with consolidating medical bills. A credit counselor may ultimately advise you to enroll in a debt management plan, and can point you in the direction of a reputable company.
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