Consolidate Your Medical Bills Early To Avoid Medical Debt Collections
The good thing about medical debts is that hospitals do not charge interest on unpaid medical bills. The other good news is that hospitals usually show their interest to work with patients to design a favorable payment plan so that they get their bills paid rather than the patient declared bankrupt in which case they will lose the entire amount.
Therefore, what you can do to get rid of the collection call which is inevitable if you ignore the medical bills is to consolidate your medical debts with others. The best way to do this is when you pay your medical bills with your credit cards.
When you do so, your medical debt becomes much more like credit card debt which you can easily consolidate in many different ways.
You may also consider consolidating your medical debt when the hospital sends your bills to the collection agency and the agency does not accept your request to set up a new and more affordable payment plan and instead threatens a judgment against you.
However, one thing you should know in this regard is that medical bill consolidation will not save you any money in any form. This is because debt consolidation does not involve reducing the outstanding amount but reduction in the rate of interest is the primary objective and benefit of debt consolidation.
The way it works
While dealing with your medical debts you can either get a personal loan or a home equity loan. Both these types of loans will be offered at a reasonable rate of interest and will provide you with an opportunity to cover the amount that you owe. It works in the following way:
- You take out a single loan of an amount that is higher than the total amount you owe
- Use this money to pay off all of your medical debts and
- Continue to repay the new creditor every month with a low payment than before.
This means you will now have only one creditor, one monthly payment, and not have to worry about keeping or losing track of your multiple bills.
Different options available
You are offered several different options to choose from when you want to deal with the medical bills that you simply cannot afford to pay at one shot right now with your given financial conditions.
You can avail these loans, benefits, and relief from different sources such a traditional bank and private money lenders and other alternative sources that provide different types of reliefs such as nationaldebtrelief.com and others.
You can take out a personal loan from a bank which is an unsecured loan as there is no collateral security required to avail such a loan. This makes these types of loans a bit riskier than others.
To cover this risk the banks often will charge you a higher rate of interest in comparison to any other loan type such as a home equity loan.
You may take out a home equity loan as well which is backed by your house as collateral. This asset eliminates the risk of the banks or the lender but puts your property at the risk of being confiscated should you fall behind your repayment terms.
However, the rate of interest charged in a home equity loan will be far less than a personal loan. What is more interesting in this type of loan is that the interest you pay to the creditor may be deducted from your taxes.
You may also choose one of the more popular options of using a credit card which may be unfortunate if you are not careful about it. Using a credit card to pay off your medical debt can very quickly become turn out to be a financial disaster.
This will soar up your credit utilization ratio as well as the total amount that you owe. Moreover, if you do not pay the credit card balance off by the end of the month it will severely harm your credit score and potentially raise the rate of interest you pay on that particular credit card. This risen amount will reflect in your next bill and continue to rise if you do not pay it off within the following month.
When you find yourself in a struggling situation with medical debt and such high credit card bills, you can consolidate the credit card debts and your medical debt into one loan payment taking the help of a debt management program.
You can seek help from a professional expert or a nonprofit credit counseling agency regarding this matter to choose the right path. The credit counselor will help you with managing your finance, getting you on a budget, and also decide how much you can afford to pay every month towards your medical bills but still lead a normal life.
Benefits of medical debt consolidation programs
There are lots of benefits of availing of a medical debt consolidation program apart from having to pay only one monthly debt payment. The other benefits that you enjoy are:
- Able to streamline the paying process of all bills when you combine medical debts with your credit card debts
- Help you to stay organized and plan your debt and finance management
- Help you to save money due to lower monthly payments and more focus on other important areas of your profession
- Help you to pay off your debt faster and more consistently than you could on your own
- Help you to rebuild your credit score and improve your credit report by making all your monthly bill payments on time
- Not have to write multiple checks to multiple doctors and hospitals as all your medical bills will be rolled into one program.
Therefore, though consolidating your medical debts may not make much difference to the amount you owe but will surely be more convenient and beneficial. At any rate or cost, this is a far better option than bankruptcy and certainly the best way to avoid collection calls. Just make sure that you are diligent with your debt consolidation loan payment, that’s all.