Do you think that learning how to consolidate medical debt will help the 79 million Americans who are currently struggling with it? Statistics reveal that 41% of the working American either have medical bills or are struggling to pay it off. This number does not include the 7 million elderly Americans who are also having a hard time paying it off.
With the rising cost of health care, it is not surprising that a lot of people will end up in medical debt. After all, we are bound to get sick every now and then. Our physical bodies deteriorate over time and as we get older, we become more prone to ailments and illnesses.
Of course, we cannot rule out accidents too. Even if you live a healthy lifestyle, one unfortunate event can land you in the emergency room. If you are not financially prepared for these emergencies, there is a high chance that you will use your credit cards to pay for your medical bills. Since your cards have a high-interest rate, failure to pay it back immediately will cost you a lot of money.
When it comes to your health, the financial aspect will be far from your mind – especially if it is a life or death situation. You would want to get the treatment done if it means saving your life or that of a loved one. You will just worry about the cost later on as long as you get better.
While it is understandable why people end up with this type of debt, that does not mean their responsibility in paying it back is any less. Fortunately, they have the option to consolidate medical debt so it will not compromise their financial future.
Different options to consolidate medical debt
There are different ways for you to consolidate all your medical bills – specifically those that you paid through credit cards. You need to get to know all the debt consolidation options that you have so you can determine which of them suits your specific financial situation.
Debt consolidation loan
The first option to get out of medical debt is to borrow a debt consolidation loan. This is a great option if you have a good credit score. It will allow you to apply for a very low-interest rate. Hopefully, it will help you save a lot of money especially if you have a lot of credit card debts. Not only that, it will simplify your payments. Instead of monitoring a lot of bills, you only have one debt to pay off. It will not feel too stressful and you can even manage to focus your attention on something else – like earning more so you can pay off your debts faster.
This option to consolidate medical debt involves the assistance of a credit counselor. This is a debt expert who can help analyze your current financial situation and various debts so they can create a customized debt repayment plan. This plan is called the DMP or debt management plan. Once you approve of the plan, they will present it to your creditors and lenders for approval. If the DMP is approved, you will send the total monthly payment to the credit counselor who in turn will distribute the money to your different credit accounts. This will include your medical debts. You can enjoy this service for a minimal monthly fee. Not only will it simplify your monthly payments, but you also have the chance to be guided by the debt expert so you will no longer land in the same credit situation again.
Home equity loan
If you own a house and you have considerable equity on it, you can also opt to borrow money against it. Since the loan will be borrowed against collateral, it will make it a secured. That would give you the lowest possible interest rate. If you have a good credit score, it will even be lower. This is a great chance for you to save a lot of money especially if you used your credit cards to pay off your medical debts. If you have significant equity, you can even choose to consolidate all the other debts that you have.
Finally, debt settlement is also an option for you to consolidate medical debt especially if you have limited financial resources. This is actually a great way to avoid bankruptcy. According to a report, 2 out of 3 bankruptcy applications are primarily caused by medical debts. Since bankruptcy will stay on your public record, you do not want to wait until you are forced into this debt relief option. This is why you need to consider debt settlement instead. This option will help you reduce your debts. The idea is to negotiate your debts so they will allow you to pay only a portion of the debt. Usually, you have to pay a one-time lump sum amount. Anything that it will not pay off will be forgiven. You have to convince them to agree to this so you can have all your medical debts gone.
What to consider when choosing your consolidation options
While all the options to consolidate medical debt are effective, you have to make sure that you know how to make the right choice. If you use the wrong one, you might end up with a bigger debt problem in your hands.
There are a couple of considerations that will help you identify the right way to consolidate your medical bills.
Your credit score
Two of the options to consolidate medical debt involves a loan. If you want to maximize the benefits of debt consolidation loan or home equity loan, you need to have a good credit score. This will ensure that you will be given the lowest interest on the loan. This will help you save money on the overall debt. If you do not have a good score, you can opt to use either debt management or debt settlement instead.
Your payment capabilities
Another thing that you need to consider is your payment capabilities. If you know that you cannot afford to pay all your debts, you need to consider debt settlement. As mentioned, this will help reduce your balance. But if you have a steady source of income, you should be able to afford your payments without a problem. If that is the case, then the other options should be good enough for you.
Your future plans
Finally, you should also consider your future plans when making a choice between the other options to consolidate medical debt. If you are relying on your home to add to your retirement money, using it to pay off your medical bills is not a good idea. Make sure that the debt consolidation option that you will choose will not compromise the goals that you have for the future. At the very least, it should bring you closer to your goal and not the other way around.