Hospital & Medical Bill Debt Consolidation

Hospital & Medical Bill Debt Consolidation

For many people, having a major illness can be financially catastrophic. Even if you have health insurance, a major illness can make it impossible to work and maintain an income. Major illness can also impact family members who may need to stay home to help provide care, reducing your family income even further. Additionally, once your health insurance is depleted or if parts of your treatment are not covered by health insurance, you are faced with even more medical bills. All of this together can destroy your finances. One financial solution may be credit counseling and a debt consolidation loan.

Effects of Past Due Medical Bills

Dealing with a catastrophic illness is hard enough. If you are faced with large medical bills, your stress level can increase significantly. In many cases, hospitals are willing to work with you if you are sincerely unable to pay your medical bills. If you ask the finance department, you may be surprised to discover there are programs available to provide you with financial assistance. However, doctors’ offices and other provider may not have these types of programs available and will turn your account over for collection.

Once your account is turned over for collection, it can begin to impact your credit report. Although you can place a statement on your credit report explaining your health situation and the financial impact it has had on you, many creditors may not take that into account if you are still getting negative reports on your credit. This can make it hard for you to get credit, qualify for a home loan, an auto loan or even get a job once you are healthy again. It may also result in your homeowners, rental or car insurance rates increasing.

Debt Consolidation Loans for Medical Bills

There are several different kinds of debt consolidation loans. Unsecured loans have more vigorous requirements and may be difficult to get if your credit is being affected by large medical bills. Secured loans require you to pledge collateral, such as your home or car, and have easier qualifying terms.Debt Consolidation Loans for Medical Bills

For most people, consolidation loans allow them to shift their debt into one monthly payment and pay off all of their medical bills. Additionally, a consolidation loan can be used to pay off other credit obligations, such as credit card bills or other accounts that have been turned over for collection. However, they usually cannot be used for home mortgages or car loan obligations.

Many financial advisers do not advise debt consolidation loans for medical bills because they may actually increase the amount of money you owe for the bills. Consolidation loans incur interest, which is not typically charged for medical bills.

Other Debt Relief Options

There are several other kinds of debt relief options that are available if you have high medical bills. Working with a debt relief organization may be one way to reduce your medical debts. Credit counselors can work with your creditors and negotiate a reduction in your bills. Often, they are able to lower the balance by negotiating elimination of any accumulated late fees or penalties that have been assessed if you have been unable to make payments.

Another thing a credit counselor may be able to negotiate is a one time settlement for your medical bills. Often, particularly if the account has gone to collection, the creditors are happy to accept a reasonable payment. As a result, a debt relief counselor may be able to negotiate a settlement for pennies on the dollar amount that you owe.

Bankruptcy is another option that may be available for large medical bills. Although this is often the last resort for many people, it may be the best solution if you are unable to negotiate with the creditors. The consequences of bankruptcy are significant. It will stay on your credit report for seven to ten years and may initially make it difficult to qualify for credit. However, many creditors will be more willing to work with you and grant credit if several years have passed and you demonstrate good credit responsibility subsequent to the bankruptcy.

Bankruptcy laws have changed in the past decade and vary somewhat from state to state. If you have the ability to pay a portion of your debts, you will be required to do so before your accounts will be settled. Also, you may be forced to sell assets, such as your house and liquidate stocks, bonds or other funds.

Catastrophic illness can also be financially devastating and easily accumulate huge hospital and medical bills you may not be able to pay.

If you are being pressed by collection companies about your medical bills, talk to a debt relief credit counselor

Discuss what your options are to resolve your financial problems. They will help you determine the best solution for your needs and help you find your way back to financial health.