The costs of health care can be detrimental to your financial health as it is easy to accumulate several large, daunting bills. If you have to have medical treatment, you could receive bills from several different sources. Consolidating your medical bills could help provide you with the relief you need in this situation.
Medical Debt Consolidation
The process of consolidating your medical bills is relatively simple. Take out a loan in the amount of your total medical bill debt. Use that money to pay off each of your medical creditors. At that point, you have only one loan to pay off instead of several different creditors. To get a loan, you may have to put up some type of collateral or you could get approved for an unsecured loan if you have good credit.
Home-Equity
One of the most common ways that people consolidate their medical debt is to take out a home-equity loan. If you have been living in your house for some time, you may have accumulated a substantial amount of equity in it. By using a home-equity loan, you can get a cash payment from a lender in exchange for the equity of your house. Using a home-equity loan is beneficial as it allows you to deduct the amount of interest that you pay on your loan from your taxable income.
Avoid Lawsuits and Penalties
One of the primary reasons that people like to consolidate medical debt is so that they can avoid collection actions. Many medical providers are very strict when it comes to enforcing their policies and collecting on outstanding debts. They may file a lawsuit against you to ensure that you pay the full balance of your account. The creditor could also charge late fees or interest on the amount that is late. By consolidating, you can get them paid off and then work with a traditional lender to pay off the debt.
Credit Cards
A strategy that many people often consider is consolidating their medical debt on credit cards. While this can work, it can also be very dangerous. If you use a credit card that has an introductory zero percent interest rate, you can save some money on interest and pay off your creditors. The downside to this approach is that you may not be able to get the balance paid off during the introductory period. If this happens, you might have to pay much more in interest charges.
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