How to Consolidate Medical Bills

Tap Into Home Equity

The advantage of using home equity to pay off medical bills is the fact that a huge chunk of pressing debt can be eliminated and repayment is spread over a prolonged period of time. Moreover, the interest paid when repaying the home equity loan is usually tax deductible.

The disadvantage of this method is the use of a large asset---the family home---to secure a previously unsecured debt. If you are unable to make the payments on a home equity loan, you may lose your home to foreclosure; if you are unable to pay your medical bills, your credit may be ruined and your account may be sent to a collection agency, but you still have your home.

Furthermore, you are now paying interest on a debt that previously did not accrue interest. If you choose to look into home equity loans to consolidate medical bills, consider using E-Loan (see Resources) or similar services that present your loan request to various lenders and help you get the best interest rate possible.

Hire a Medical Debt Negotiator

Medical debt negotiators work with anyone whose medical bills are overwhelming and who has no way of borrowing the funds needed to consolidate all the bills into just one loan to pay them off. Much like an unsecured credit loan negotiator, medical debt negotiators contact the various medical offices to whom you owe money and seek to settle your account for a lower amount in return for a promise of steady payments. Franklin Debt Relief (see Resources) is one of the providers of this service. The negotiator estimates that they can save consumers up to 50 percent per month in payments and get them out of debt in as little as one to two and a half years. There is a fee for the service, and if you want to hire a medical debt negotiator, be aware of all the fees, obligations and rights you have.

Take out a Medical Debt Consolidation Loan

Find a lender that specializes in writing loans for consumers overwhelmed with a large number of medical bills. Medical Debt Resources (see Resources) and similar agencies specialize in helping consumers who are unable to negotiate more favorable terms with the various medical offices to whom they money. Additionally, such services also cater to those families who are not able to qualify for governmental grant money, public assistance or even debt forgiveness for compassionate reasons. A medical debt consolidation loan is an unsecured debt and therefore carries a higher interest rate; it only saves you money if the overall monthly payment is lower than the sum of all payments you are making now. In the long run, you will pay more money because you are now also liable for an interest payment.

Consolidate Into a Bankruptcy Discharge

This is the least desirable option for any debtor, but if you find that you cannot qualify for a loan and medical offices are unwilling to negotiate with you or a medical debt negotiator, and if your overall debt is so pressing that you cannot make ends meet, then bankruptcy may be your only option. Since medical bills are not government debts but unsecured loans, they are completely dischargeable.