How to Deal with Medical Debt to Avoid Bankruptcy



How to Deal with Medical Debt to Avoid Bankruptcy

Medical debt can be overwhelming. Hospital bills, doctor bills, prescriptions – it all adds up so fast. Before you know it, you owe thousands of dollars with no way to pay. Bankruptcy may seem like the only option. But don’t give up hope! There are ways to deal with medical debt without declaring bankruptcy. This article will explain how.

Understand Your Medical Bills

The first thing to do is make sure you understand exactly what you’re being charged for. Get an itemized bill and check it closely. Oftentimes there are expensive charges for things that aren’t real1. Compare the charges to your insurance explanation of benefits. Call your provider if you see discrepancies. Don’t pay anything until you’re sure the bill is accurate.

Negotiate with Providers

Many medical providers are willing to negotiate payment plans. Explain your situation and ask for a discount. Don’t take the first offer – keep negotiating. Be persistent and polite. Ask to speak to a supervisor if needed. Healthcare providers would rather get a lower payment than no payment at all. They don’t want you to declare bankruptcy either.

Payment Plans

If a lump sum payment isn’t possible, ask for a monthly payment plan. Make sure it’s affordable based on your budget. Negotiate the length of time you have to pay it off. Many providers are willing to stretch payments over several years if needed. Just be sure to get the agreement in writing. Send payments on time every month.

Financial Assistance Programs

Many hospitals and clinics offer financial assistance for patients who can’t afford their bills. Eligibility is usually based on your income. Look on your provider’s website or call to ask about applying. These programs can reduce or even eliminate your medical debt. It’s worth taking the time to submit an application.

Medicaid Coverage

If your income is very low, you may qualify for Medicaid. This government health insurance program covers hospital stays, doctor visits, prescriptions and more. Medicaid eligibility varies by state. Your local social services office can help you apply. If approved, Medicaid may pay for some or all of your existing medical bills.


Sites like GoFundMe allow you to tell your story and ask friends/family for help paying medical bills. Make your campaign page informative and sincere. Share it on social media. Update donors on your progress. Many people are happy to donate to help someone in need. Just beware of scammers – only donate to people you know.

Hardship Programs

Utility and cell phone companies often have hardship programs to help customers who can’t pay their bills due to medical issues. Explain your situation and ask if they have any financial assistance options. You may be able to get existing balances waived or reduced, avoid shut-offs, and/or set up affordable payment plans.

Debt Consolidation

Debt consolidation rolls multiple debts into one new loan with a lower interest rate. This makes your monthly payments more affordable. Banks, credit unions and online lenders offer debt consolidation loans. Make sure to compare interest rates and fees first. Debt consolidation works best if you can get a rate much lower than your current debts.

Balance Transfer Credit Cards

Many credit cards offer 0% interest for 12-18 months on balance transfers. Transfer your high-interest medical debts to one of these cards and you won’t owe any interest for over a year. Just be sure to pay off the full balance before the 0% promotional period ends – otherwise interest skyrockets. Make payments on time to avoid fees.

Home Equity Loan

If you have sufficient equity in your home, a home equity loan or line of credit can provide funds to pay off medical debt. The interest rate is usually lower than credit cards. You’ll need to make monthly payments, but they should be manageable. Be cautious about putting your home at risk though.

401(k) Loan

As a last resort, you may be able to borrow against your 401(k) retirement account. Interest rates are low and you repay the loan through payroll deductions. Be extremely careful with this option, as you sacrifice retirement savings. Only borrow what you absolutely need and repay ASAP.


If you’ve exhausted all other options, bankruptcy may be your only choice left. Medical bills can be discharged through bankruptcy, but your credit score will suffer. Filing Chapter 7 bankruptcy liquidates assets to pay debts, while Chapter 13 sets up a repayment plan. Consult a bankruptcy attorney to discuss your specific situation.

Dealing with overwhelming medical debt is stressful, but bankruptcy should be a last option. Be proactive about negotiating payments, calling providers, and exploring assistance programs. Take advantage of payment plans, loans and community resources. With perseverance and creativity, you can find a way to pay down your medical debts without sacrificing your financial future.


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