Is Medical Debt Consolidation The Right Option for You?

Accidents do happen, and the hard part often comes after the incident. The emergency room trip and the treatment plans that follow can wreck a family’s finances with medical bills in seemingly no time at all. When unexpected accidents occur alongside regular (and still expensive) medical expenses, the result is often years of stress spent trying to hold together your family’s monetary well-being. 

Stress also expounds when you don’t have insurance. Even if you do, your provider may not cover a significant portion of the costs. The classic method of cutting back on frivolous spending may help make a dent, but if doing so isn’t enough to make a difference, then medical debt consolidation may be right for you.

What is Medical Debt Consolidation?

Most medical debt consolidation strategies involve taking out a loan of some kind, which will incur recurring interest payments at a varying interest rate. It’s important to note that medical debt does not come with interest rates, regardless of the amount of time it takes you to pay off the debt. Even though it should be considered a last resort option, medical debt consolidation can be a significant debt relief when you feel like you’re up against a wall with all of your medical bills.

From start to finish, the most apparent form of medical debt consolidation requires taking out a personal debt consolidation loan then paying off your medical bills and the loan as soon as possible. You can find medical debt consolidation loans at favorable interest rates if your credit score is above average. 

Once approved, however, you can use the money as you see fit, whether that is paying off a large sum of your medical bills and paying some towards other debt you hold or using it entirely for the medical bills you have to pay.

How Do You Know if Medical Debt Consolidation is Right for You?

At face value, medical debt consolidation sounds like a mountain to climb all on its own. However, managing several medical bills, each with their monthly payment plans, can be an even more complicated task. If your medical bills are, in fact, few enough to handle, you can sit down to review all of your medical debt and other expenses. With any type of medical debt consolidation, there is often some kind of interest rate that you will pay.

When medical bills arrive, some people begin paying them off with a credit card. Using a credit card can be a dangerous game, as they sometimes have higher interest rates than medical debt consolidation loans. If you’ve begun charging your medical bills to a credit card, it is worth looking into medical debt relief loans to secure a lower interest rate.

What are Your Options for Medical Debt Consolidation?

As we mentioned above, medical debt consolidation loans are a great start to begin your research into alternative ways to pay off your medical bills. We will go into a little more detail on loans, but other options may benefit you if you fit the criteria.

Debt Consolidation Loans

Personal debt consolidation loans can be a great option, since you can use them for any expense you may incur in your daily life. You are not limited to using the funds for purely medical expenses, so this may free up other debt weighing on your family’s financial well-being.

Credit Card

While we do not recommend this as a “first-look” option for you, using a credit card to pay medical bills can be done responsibly. If you have a credit card with a healthy usage history or qualify for a 0% interest rate credit card, this option may be for you. Be wary, however, because credit lines can be maxed out and begin to damage your credit score.

This method may be tempting, but it requires you to be extra conservative in how you use your funds.

Home Equity Loan

Using a home equity loan is likely even riskier than using a credit card to pay off your medical bills. When you take out a home equity loan, you’re putting your house up as collateral to cover your medical debt. If you default on the loan, you could very well lose your home. Tread carefully when considering this option.

Debt Management Program

Debt management program may be a suitable option if you have multiple medical bills that you can’t handle on your own. There is much more “clerical” work associated with this route, but in essence, you hire an agency to negotiate an agreement between all parties involved to consolidate all your medical bills into one payment you make to the agency hired

401(k) Loan

If accessible, your 401(k) account can help you pay off overdue medical bills if specific requirements are met based on the size of your medical bills and your adjusted gross income. If you meet these criteria, you might access your retirement account without paying the penalty for withdrawing funds before your retirement.

Alternative Options

If you believe that you haven’t done your due diligence before taking out a loan, consider the following alternative methods of addressing your medical debt problem.

Review Medical Bills

In a perfect world, there would be no errors in the realm of medical bills. However, this is not the case, and you should be ready to compare an itemized list of services and your insurance provider’s explanation of benefits (EOB). Errors and mistakes do happen, and they could be the result of clerical mistakes such as duplicate charges, charges for services never received or canceled, incorrect quantities, and more. 

Suppose you notice any mistakes after reviewing the paperwork and possibly contacting the medical provider’s office and your insurance company. In that case, you should request an immediate restructuring of the bill so you can pay your bills and not a cent more.

Negotiate Medical Bills

It could be worth your time many times over to contact your medical provider and inquire about the financial assistance program they may offer. Most offices or hospitals don’t advertise this information, but they will inform you of any programs if you ask. Negotiation of medical bills is commonplace, so you should be confident and comfortable approaching your medical provider office to ask about financial assistance with your medical debt.

Consult a Credit Counselor

Non-profit organizations exist that can guide you through the two processes mentioned above, namely reviewing and negotiating medical bills. The counselor may even be able to represent you while dealing with the relevant parties. At the very least, a credit counselor may be able to help you understand your budget and medical bills more completely.


Another option available to you, depending on your income and your family’s size, is Medicaid. Eligibility for the program is different state-to-state, so a little research is necessary to determine if this is the right path for you. Once you are approved, Medicaid may be able to cover some of the many medical bills you have.


One alternative that has increased in use and popularity in recent years is crowd-funding. Companies like GoFundMe offer a platform for the donations that could be the relief you need. There is often a stigma associated with asking for help. Still, when times are tough, and other options have been exhausted, this could be an efficient and easy step in the right direction.

Filing For Bankruptcy

Some people may consider filing for bankruptcy if they have run out of other options. If your total unsecured debt (e.g., medical bills) is less than $394,725 and secured debts (e.g., home equity loans) are less than $1,184,200, you are eligible to file for Chapter 13 bankruptcy.

If you file for Chapter 13 Bankruptcy, it will result in all of your unsecured debt (medical debt included) falling into one category. A judge then determines what portion of your unsecured debt you can pay based on your disposable income level.

Filing for bankruptcy can damage your credit score. However, if your credit score is already well below average, then filing for Chapter 13 Bankruptcy won’t make as significant a negative impact.

In Conclusion

As detailed above, there are many medical debt consolidation approaches and even more alternatives to get your medical bills under control. Organizing and keeping your family’s finances in check is difficult even during the best of times. When unexpected or excessive medical bills enter the mix, the result can be unhealthy stress levels and worry if you don’t act soon. 

Using the information above, you can now make wise and educated decisions to find the right approach to reach the light at the end of the tunnel.