How to Pay Off Medical Debt

Once you’ve taken on a medical debt, you should treat it just like any other debt. Decide on a plan for tackling it, such as ­working your necessary payments into your budget and cutting down discretionary spending.

You may be able to free up cash for medical bills by taking care of other debts. Look into settling your credit card debt, so that you’ll have extra money on hand to put toward medical bills.

Settling Medical Debt

If you cannot afford to pay off your medical debt, it’s time to seek alternative financial paths.  As with credit card debt, you may have the option of settling medical debt for less than what is owed.

Settling a medical debt is much the same as settling any other type of debt. You – or someone working on your behalf – will contact the doctor, hospital or collection agency to begin negotiations. Often, the creditor will agree to accept an amount that is less than your balance.

The process is often done with the help of a professional at a debt settlement firm. An experienced debt specialist can help you decide on a settlement offer. These professionals also may be well-versed in negotiating with creditors.

Experts advise that you start the settlement process as early as possible, before your health care provider turns the debt over to a collection company. In cases of medical debt, a collection agency has significantly less motivation to settle than a doctor or hospital would.

Medical Bill Forgiveness

If you have a verifiable hardship, like a disability which prevents you from working, you may be able to seek medical bill forgiveness. In this case, you petition the provider to forgive the debt entirely. Your provider will want to see proof, in the form of tax returns and written documentation, that you have no means to pay your medical bills. You can also apply to nonprofit organizations like the PAN Foundation and CancerCare for help with your medical bills.

If debt settlement or forgiveness aren’t options for you, consider employing these other debt reduction strategies:

• Apply for a bank loan.
• Pay off your medical debt with a credit card.
• Secure a home equity loan or line of credit.
• Look into a medical loan.

Using Credit Cards to Pay a Debt

Before paying a medical debt with credit cards, understand the consequences. Credit cards are best used to cover short-term expenses – those that you can repay at the end of a monthly billing cycle. If you don’t have the money to pay your credit card bill, you’ll almost certainly face a new problem: credit card interest and growing debt.

Interest on credit cards can be very high, and if you don’t have enough to pay the credit card bill you are essentially transferring your medical debt to credit cards that will begin demanding payment. Even if you can afford the minimum monthly card payment, the interest on the unpaid debt will add quickly to your debt. Before using a credit card, consider how you will pay off the card debt and know the terms. Know the credit cards’ APR and use cards that charge the least interest. Also make sure that you have enough available credit to cover the bill.

If you conclude that you won’t be able to pay your credit card debt, consider other options. Paying a medical bill with a credit card might stop the hospital or medical practice from contacting a collection agency, but will only delay a collection action if you miss credit card payments.

Many financial experts say you should never use credit cards for medical bills unless you are confident you can pay the credit card bills promptly. If you can’t, first discuss whether the medical provider might offer an interest-free payment plan, which would be more manageable than a credit card debt that accrues interest.

Some patients opt to use medical credit cards, which are like conventional cards but are designed exclusively for medical expenses. Application forms are sometimes available in doctors’ offices.

Before applying for a medical card, especially one that advertises no interest on balances, carefully review the terms. You probably will discover that the no-interest grace period ends in several months and the interest rate charged after that is quite high.