Consolidating Medical Bills With Care And Proper Counseling Can Be A Practical Solution
Often people are found struggling with medical bills and in such a situation consolidating the medical bills can prove to be the most practical solution and a wise decision especially when you are overwhelmed by the amount of money you owe from the medical situation and find it hard to meet the bills. However, you will need to be a bit careful about your approach, especially after you take on the loan.
There are a few specific things that you should watch out for to make your debt management process a success especially when you are overwhelmed by debt. According to experts, a person in debt should always find and consult with a reputed and reliable credit counselor before going ahead with the process. It is also recommended that you check out the debt consolidation reviews to know about the process, its effects and the things that you should do to make it a success.
Apart from that, you must also make sure that:
- You do not ignore your secured debts in order to pay off your unsecured ones
- You do not borrow against your retirement plans or saving accounts
- You do not use cash-out refinancing to pay off the unsecured debts
- You do not make any hasty decisions simply to avoid the collectors who are harassing you
- You do not pay even a single penny without any written agreement and
- You know about the cost factor of such programs.
Ideally, consolidating your medical debt is much more reasonable that getting it settled. This is because a consolidation program will help you to lower the interest and pay off your debt through an affordable and new payment plan without affecting your credit history negatively.
More fact on consolidating medical bills
Millions of people all over the world fall victim to medical debt every year. These debts are often belt-tightening even for those people who have solid health insurance coverage to back them up. That means, these debts can be more overwhelming and frustrating to those who have no insurance policies with extraordinary deductibles. These are the people who find medical debts often crippling.
A survey conducted by Kaiser Family Foundation found that even a single and simple medical problem can send people completely under if they are already struggling financially. For these people medical debt consolidation is the only feasible and productive way to deal with the healthcare expenses when it rises beyond their ability to pay it off.
Committing to a consolidation plan
Before you commit to a medical debt consolidation plan, it is important that you weigh the option, the pros and cons, your situation and ask a few questions to yourself such as:
- Does this option make any financial sense given your current situation
- Will a medical debt consolidation plan actually eliminate your debt
- Is there any chance that such an option may extend your financial suffering and in the end compel you to file for bankruptcy
- Whether or not the terms and conditions of the plan is acceptable to you
- Do you need any help and if so what will be the price that you have to pay for it and
- If you opt for a secured debt consolidation loan then what are the specific assets that you should consider using as collateral so that it will not pose any irrecoverable damage or risk in the future.
There is also another very important that that you should focus before you consider consolidate your medical debt. You may know that all loans come with a specific rate of interest, fixed or floating, which will raise the amount of money borrowed and which you are legally responsible to pay back to your creditor along with the principal.
On the other hand, your medical debt will not accrue any interest even though the hospital or clinic may eventually hand your unpaid bill to a collection agency.
Important decision to make
Therefore, it is an important decision to make, whether you want to take on a costly loan just to pay off your interest-free debt.
- This is an important decision because when you take on a medical debt consolidation loan and pay off your medical debt, you may not owe anything to the hospital anymore but you will be liable to repay your new source of credit.
- Moreover, this amount will be much more than the actual amount you owed to the hospital. This is because irrespective of the fact that you take on a Home Equity Line Of Credit, a credit card or a personal loan, you will have to pay interest on the new debt. This interest will accrue every month on the balance amount that you carry.
This brings to an obvious inference that you should never consolidate medical debt unless you owe money to other creditors as well. In such situations, a nonprofit credit counselor is the best person to discuss with on how you should consolidate all your existing debts into a payment that you can easily afford.
Remember, debt consolidation will not reduce the amount owed but will simply reduce the number of debts and monthly payments. Therefore, you will only get relief from the high monthly bills and not have your loan amount reduced.
Things to do before counseling
However, you must still take a chance before you opt for consolidating your debt. There can be a way other can consolidation when you contact the hospital or the doctor who billed you and discuss your problem.
It is found in many cases that medical bills include things that are included to inflate the bills issued especially to those without sub-par policies or health insurance. These are the amounts that are called the retail cost of service by the medical providers which the people having insurance pay in full.
If you do not have any such polices and explain your situation to the healthcare provider politely, it is highly likely you may be able to eliminate these retail costs of service and reduce your bill. Though it may affect your credit but it will be temporary and you can rebuild it fast with a little discipline.