How to Recover From Medical Debt
According to the Department of Health and Human Services, the estimated medical expenses for the average U.S. citizen in 2016 was $10,365 for the year. This is a staggering amount, and with this in mind, it is not surprising to learn that medical bills are the leading cause of bankruptcy in the United States. Regardless of the medical events that have occurred in your family this year, you may be looking for a way to cope with mounting medical debt.
Set Up a Payment Plan for Large Bills
In many cases, after you have been hospitalized or had a procedure, medical bills may start rolling in over the course of the next few weeks or months. These may be from the hospital, the doctor who performed the surgery, the lab testing company, the anesthesiologist and others. For smaller bills, pay them off in full as soon as possible. For larger bills that you cannot afford to pay in full, contact the billing office immediately. Explain that you have a considerable amount of medical debt and that you need a payment plan. Most will be willing to work with you, and some may even stretch out payments over the course of a couple of years.
Open a Debt Consolidation Loan
There may be instances when the minimum monthly payments that you establish with your medical offices yield a total monthly debt payment that is too high for you to pay. For example, an emergency dentist treatment may not be covered by your health insurance plan, and you may have to pay thousands of dollars or more out of your own pocket. Medical bills generally do not have an interest rate, so you should pay them on their own if possible. However, a debt consolidation loan with a low interest rate may be used to reduce your monthly debt burden. This is because a debt consolidation loan may spread out the monthly payments over the course of five or even seven years or more.
Refinance Your House
For very serious situations where you have tens of thousands of dollars of debt, you may consider refinancing your house. The medical bills may be tax deductible, and the interest on a home loan may also be deductible. This gives you multiple deductions to benefit from. However, many people who get to the point of needing to refinance debt to pay such high medical bills also consider filing for bankruptcy. After all, they do not want to jeopardize the security of their home by leveraging it.
Monitor Your Credit
Medical bills generally will not appear on your credit rating. However, if you fail to make payments as agreed, these debts may show up as collections accounts. Collections accounts can severely damage your credit rating. In addition, if you use a debt consolidation loan or other type of financing, this may show up on your credit report. These are not negative events on a credit report, but the added debt may slightly lower your rating. If you move forward with filing for bankruptcy, this event may show up on your credit report for seven years or longer and may severely damage your credit rating. The best credit repair companies can assist you in repairing your credit scores while you work on managing your debt balances.
Medical debt is unfortunately an issue that many people will need to deal with at various points over the years. Some people are hit with a second or third medical problem before they have fully paid off the debt from the first one. A smart idea is to purchase a protective and inclusive health insurance plan. It is best to pay for a higher premium than to deal with the potential for tens of thousands of dollars in medical bills. If you are not insured today or if your insurance is not fully protective, consider contacting an insurance broker or company for a quote.