Does Debt Settlement Work For Paying Off Medical Bills?
Medical bills are often more expensive than many families are able to manage. Even families who have solid, middle-class jobs are struggling to manage the payment of medical expenses. When the bills from hospitals become too high, it might seem tempting to try solving the problem by paying with credit cards, but other solutions are still available that can make it easier to handle.
Understanding Settlement
Debt settlement is a type of credit relief option that makes it possible to pay for medical expenses for a much lower cost than the initial charges for services rendered. Since medical bills are considered an unsecured debt, they are possible to put into a settlement program when it is simply not possible to manage payments or the bills go into collections as a result of defaulting on the payment plan.
Debt settlement programs differ from consolidating debt because they are an extreme measure to get the bills under control. When it relates to medical expenses, the use of consolidation might not be enough to make it affordable, particularly when the expenses are very high from emergency health services.
Settling the medical bill requires saving up a percentage of the debt and then working on a negotiation to pay a lump sum of cash if the hospital or the collections company forgives the remaining amount.
Working with Companies
When planning to settle medical bills, it is often best to work with a professional company for optimal negotiation processing. The professional settlement companies are skilled at negotiation and have experience working with medical bills and similar unsecured bills. As a result, they understand how much to offer in negotiation and know when the hospital is likely to agree to the settlement measures.
While companies differ in their policies, they usually ask the customer save up a lump sum of cash until it reaches a certain percentage of the payment. For example, the company might ask for participants to save up to 30 percent of the medical bill before they start working on the negotiation process. The lump sum provides the initial capital for negotiations.
After the funds are available, clients are expected to continue saving while the hospital and the professional settlement group start discussing reductions in the price. This provides more money for the company to work with in its negotiation. Depending on the credit relief company, the hospital and whether the bill has gone into collection, the negotiation will vary in the reduced amount.
Paying the Bill
Once the negotiation process is complete, which might take as long as a year or as short as a few months, the lump sum saved over the course of the negotiation and beforehand is used to pay the full amount required by the hospital or collections company for the medical bill.
After paying the full cost negotiated by the professional group, the remaining amount of the medical bill is forgiven by the hospital or the collector who purchased the debt.
This means that the bill is effectively paid in full and will show up on a credit report as settled or paid instead of delinquent. While the forgiveness of the bill does not mean the credit score will increase, it does mean that it is no longer necessary to make payments on the hospital bill.
Medical bills are considered an unsecured debt. It is possible to settle or consolidate this type of bill, so families are able to find relief from high medical costs. After settling for a lower cost, the debt is considered paid and the hospital will no longer charge consumers for the debt.