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Cures for medical debt

| Dec 23, 2020 | Debt |

Medical treatment can cause financial ills. According to recent research by Ascent, 16 percent of Americans, 52 million people, have medical debt in collections. This situation can lower credit scores and lead to expensive monthly repayment plans. There are options, however, that can help deal with this debt.

Act immediately

Finding a solution to medical debt is easier if you start before you fall behind your payments. Speak with your health provider and find out whether they have less costly options or ways to lower your costs. If you believe you are going to miss a payment, contact your creditors before the due date.

Taking preemptive steps can prevent damage to your credit scores caused by late payments. Creditors may be more willing to work out a solution because it is less costly than having a consumer in default.

Negotiate prices

Care providers often charge large sums for procedures and use high prices to improve their negotiating position with insurers. Insurance companies, however, do not pay these higher rates. Patients may end up paying more if they are uninsured or do not contest the charges.

When you are charged for medical treatment, find out whether Medicare or private insurers will pay for the same services. Then ask for that discounted rate from your medical provider.

Payment plans

Speak to your health provider or creditor about a revised payment schedule if you cannot make payments under their proposed schedule. Many times, they prefer getting paid a smaller amount over a longer period instead of risking a default.

Refinancing

Refinancing medical debt may reduce the interest you are paying. This can make payoffs easier and less expensive. It may reduce the risk of default by lowering monthly payments.

Options include a low-interest personal loan. A balance transfer credit card may offer zero percent promotional rates and send you balance transfer checks to pay medical bills and other debt. These are not cash advanced checks and it is important to first know their interest rates and fees.

Negotiate a settlement

If all else fails, you can try to make a lump sum payment to settle your debt below what is owed. This can damage your credit score, but you can try to have your account listed as paid in full in exchange for this payment.

These options may have advantages if you already fell behind on your debt. Your credit scores may be affected, however. Before you make any payments, get an agreement in writing.

An attorney can explore these and other options with you. They can also assist you with a Chapter 7 or Chapter 13 bankruptcy when this debt becomes unreasonable.