Medical debt settlement: How to cure all your healthcare bills

All debt sucks, but the worst kind is medical debt.

Either you or a loved one has just survived a health scare, and the treatment was costly. Now you’re stressed out physically, emotionally – and financially.

Worse still, the Internet’s advice isn’t very helpful. Most “expert” suggestions aren’t really solutions. To put it in medical terms, they cure the symptoms, not the disease.

The most powerful antidote to medical debt is debt settlement. But because it’s still a rather new application of an old debt solution, it’s not particularly well known.

What exactly is “debt settlement”?

Here’s how I explain debt settlement in all its excruciating detail. But to speed us along to the medical part, watch this 60-second video that gives you a painless definition…

3 things to try first

Debt settlement is such a powerful solution, I don’t recommend it if another option is available. It’s akin to curing your headache with surgery instead of an aspirin.

But medical debt is such a huge problem, debt settlement is frequently the only option.

Every year, Debt.com polls Americans about their medical debt, and the results are scary:  4 in 10 have medical bills they can’t pay, and a quarter of those are in collections. Debt settlement is usually what they need, and STAT.

But before you call a debt settlement company, call the people who control your medical debt. That might be a doctor’s office or a hospital. Then try this, in the following order…

1. Ask to pay less. That’s right, sometimes you shave dollars off your bill just by asking. Call your healthcare provider and calmly explain you can’t afford to pay everything you owe right now. Sometimes, they’ll ask what you can afford, so have a number in mind. If that doesn’t work, providers might be willing to…
2. Set up a payment plan that charges you per month instead of all at once. Problem is, you end up paying more overall. That’s because you’ll be charged interest, just like when you carry a balance on your credit cards. If this still doesn’t work for you…
3. An “income-driven hardship plan” might qualify you for lower payments. Many healthcare providers offer these plans, and the amount you pay is determined by your income level. That means your income needs to be low enough to qualify.

If none of these options work for you, time for debt settlement. So let’s talk about exactly how it works on your medical bills.

Debt settlement and medical bills

Here are three things to know…

1. Debt settlement only works with debts that are in collections. The reason is simple. That gets the attention of your creditors. They’re on the brink of getting nothing back, so they’ll work with you.
2. It can take more than 120 days for unpaid medical debt to be sold to a collection agency. So you need to check the status of your medical bills before pursuing debt settlement.
3. Set aside an hour for an in-depth phone call. When you call a reputable debt settlement firm, you’ll speak to a trained counselor who will review your financial situation – in depth and confidentially.

If that sounds complicated, you’re right. That’s why a reputable debt settlement company is so helpful.

You’ll notice I’ve used the word “reputable” in two consecutive sentences. That’s because some places are definitely not. Here are six easy ways to tell. Actually, here’s one easy way to tell: Call Debt.com. Our debt settlement partners adhere to our Code of Ethics, and they’re all accredited by organizations like the American Association for Debt Resolution.

None of our partners will charge you an upfront fee, they put everything in writing for you, and they explain everything in plain English. You can ask as many questions as you like, and you’ll get an accurate estimate of how much you can save.

What happens after you settle your medical debt

If your counselor determines you’re a good candidate for debt settlement – and if you’re not, they’ll refer you to another solution – you’ll eventually be charged a fee  of $1 for every $2.64 in credit card debt.

You’ll also notice your credit score will drop, sometimes up to 100 points. But don’t worry, that’s temporary, and a credit repair service can help fix your credit.

If you want to know more before you feel comfortable calling Debt.com, check out our comprehensive debt settlement explainer. It’ll answer every question you have – and some you didn’t even know you wanted to ask.

My last word on this topic: If you’re struggling with medical bills, the worst thing you can do is nothing. You shouldn’t ignore health problems, because they’ll just get worse. Well, the same thing happens with financial problems. But there’s one big difference: We don’t charge you for a diagnosis. When you call Debt.com, it’s free. When you get a financial review, it’s free. When you receive a recovery plan, it’s free. And when you pay a fee, it’s a sliver of what you’ll save. That’s a promise. I swear on my health.

In terms of credit reporting, settled medical debt shows up as a “settled” account. You can attempt to reduce the negative impact of this by reclassifying the account during negotiations. Request that the account be listed as “paid in full” so you’re not advertising that you didn’t pay back the full amount you originally owed. Or you can ask to re-age your account and have old delinquent payments removed

If your independent efforts don’t come up with any results, it’s time to call a debt settlement company. Debt settlement may lower your credit score for the time being, but you can work your way back from the negative impact.

When you’re stuck with medical debt – which, as Field puts it, can feel “more unfair” than other debts, it’s time to take action. Assess your own unique situation to determine what financial peace of mind is worth.

Explore 5 easy steps of debt settlement / debt settlement in 5 easy steps and decide if it’s right for you.

Field said clients end up paying – including fees – about “30% less” than what is initially owed.