Medical Debt Relief Options Besides Bankruptcy


Medical Debt Relief Options Besides Bankruptcy

Medical debt can be overwhelming. Hospital bills, doctor bills, prescriptions – it all adds up so fast. You want to pay what you owe, but the costs are just too high. What can you do besides declare bankruptcy? The good news is, you have options. This article will discuss ways you can get relief from medical debt without having to file for bankruptcy.

Payment Plans

Many healthcare providers are willing to set up payment plans for medical bills. This allows you to pay off the debt in smaller, more manageable amounts over time. For example, you could pay $100 a month instead of coming up with $5,000 all at once. Call the billing department and ask what types of payment plans they offer. Be prepared to provide information about your income and expenses so they can come up with a realistic payment amount for you.

Some things to keep in mind with payment plans:

  • Get the terms in writing – how much you’ll pay each month and for how long
  • Make sure the payments fit within your budget – don’t agree to more than you can afford
  • Ask if they’ll waive late fees as long as you stick to the plan
  • Find out if interest is charged and see if you can negotiate a lower rate

Payment plans allow you to resolve the debt over time without damaging your credit. Just be sure to make the payments on time each month.

Medical Credit Cards

There are credit cards designed specifically for healthcare expenses. With a medical credit card, you can charge doctor and hospital bills to the card and pay it off over time. Just like a regular credit card, you’ll make monthly payments including interest. But medical credit cards often have lower interest rates and more flexible terms compared to traditional cards.

Some popular medical credit cards include:

The advantage of a medical credit card is you can charge new expenses to it over time as needed. Just be careful not to overspend. Only charge what you can realistically pay off.


Personal loans allow you to borrow a lump sum of money upfront and pay it back in fixed monthly payments over 1-5 years. The loan proceeds can be used to pay off medical debt. This consolidates multiple bills into one manageable payment.

Banks, credit unions, and online lenders offer personal loans. Compare interest rates and fees to find the best loan terms. The lower the rate, the less you’ll pay overall. Good to excellent credit scores get the lowest rates on personal loans.

A home equity loan lets you borrow against the equity in your home. It works much like a personal loan, with fixed payments over a set repayment term. The benefit is home equity loans often have lower interest rates. The risk is your home secures the debt, meaning it can be taken if you default.

Personal and home equity loans turn unmanageable medical bills into one predictable monthly payment. Just be sure to borrow only what you need and can afford to repay.

Balance Transfers

Many medical facilities allow you to charge bills to a credit card. If you have existing credit card debt with high interest rates, a balance transfer may help. This involves transferring the balance from high-rate cards to a new card with a 0% introductory APR.

You typically get 0% interest for 12-18 months. During this time, all payments go toward the principal balance. Look for cards with no balance transfer fees. Make payments on time to avoid interest when the intro period ends.

Balance transfers allow you to pay off medical debt faster by saving on interest. Just be sure to have a payoff plan for when the intro APR ends.

Hardship Programs

Many hospitals offer financial assistance programs or hardship payment plans for patients struggling with medical bills. These programs go by different names like charity care, financial aid, or income-based plans.

Eligibility is based on your income, expenses, assets, and amount owed. If approved, the hospital may reduce or forgive part of what you owe. Or they may set up affordable payment plans tailored to your budget.

Ask the billing department if they offer a financial assistance program. Be prepared to share financial documentation to determine if you qualify. This is a great option if money is extremely tight.

Negotiating Bills

You may be able to negotiate your medical bills and reduce what you owe. Hospitals often charge uninsured patients inflated rates that are higher than what insurance companies pay.

Do some research to find out reasonable costs for the services you received. Then call the billing department and politely ask if they’re willing to lower your balance to a fair price. Share your financial situation and offer to pay a lump sum if they’ll settle for less. Many hospitals will negotiate rather than send debt to collections and receive nothing.

If the hospital won’t budge, try negotiating with any collection agencies your debt gets sent to. They likely paid pennies on the dollar for your account. So even a lesser amount from you is pure profit for them.

Debt Consolidation

Debt consolidation combines multiple debts into one new loan with one monthly payment. This can make managing bills simpler. Consolidation options include balance transfer credit cards, personal loans, and home equity loans.

Non-profit credit counseling agencies also offer debt management plans (DMPs). With a DMP, the agency negotiates lower interest rates with your creditors. You then make one monthly payment to the agency who distributes it among your accounts.

The risk with consolidation is you’re taking on new debt. Be cautious of extending loan terms, which increases interest costs over time. Consolidate only if you can afford the monthly payment and have a payoff plan.

401(k) Loans

If you have money saved in a 401(k) account, you may be able to borrow against it. 401(k) loans typically have low interest rates and reasonable repayment terms. Just be sure to repay the loan on time to avoid taxes and penalties.

Only borrow what you need and can afford to pay back. Don’t jeopardize retirement savings as a first resort. Explore other options first and use 401(k) loans as a last alternative.

Borrow from Friends or Family

If you have relatives or friends in a position to help, you may want to swallow your pride and ask for financial help. Explain your situation and ask if they’d be willing to loan you money to pay off medical bills. Offer to sign a contract agreeing to repayment terms.

This informal loan allows you to resolve debt without interest. Just be sure to stick to the agreed repayment schedule. You want to avoid damaging personal relationships.


Sites like GoFundMe and GiveForward allow you to raise money from friends, family, co-workers, and even strangers. You’ll create a fundraising page explaining your situation. If people want to help, they can donate.

Crowdfunding won’t work for everyone. But it can be an option if you have a sympathetic story and a wide social network willing to pitch in. Even small donations add up. You may be touched by people’s generosity and kindness.


Bankruptcy should be an absolute last resort if you’ve exhausted all other options. Filing bankruptcy stops collections calls, wage garnishment, and lawsuits. Medical debts can be discharged along with other unsecured debts like credit cards.

However, bankruptcy severely damages your credit for 7-10 years. It will make it very difficult to qualify for future loans or credit cards. Weigh the pros and cons carefully before choosing this option. Meet with a bankruptcy attorney to discuss your specific situation.

Avoid Doing This

While the above strategies can provide medical debt relief, here are some things you SHOULD NOT do:

  • Use payday loans – These trap you in a cycle of ultra-high interest debt.
  • Rely on credit cards – Easy to overspend and get stuck paying costly interest.
  • Borrow from 401(k) first – Only as a very last resort to avoid penalties.
  • Take money from savings – Don’t wipe out your emergency fund.
  • Ignore bills – This will only worsen the situation.

Getting Help

If you’re feeling overwhelmed by medical debt, talk to a non-profit credit counseling agency. They can help you manage bills, negotiate with creditors, and find the best solution for your situation. You don’t have to tackle this alone.

While medical debt can be stressful, know there are always options. Stay positive, develop a payoff plan, and take it one step at a time. Your health is most important.

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