Medical Debt Relief: A Path to Settle and Consolidate Your Medical Bills

Medical Debt Relief
Key Takeaways:
  • Several debt relief options exist that can help with your medical bills.
  • You can pursue some strategies yourself, or turn to an experienced professional for help.
  • Getting started sooner usually means you’ll have more options to choose from—and those solutions are more likely to be effective.

Health problems are stressful enough without the additional worry of paying for them.  Unfortunately, debt from medical bills can drag out for years. 

If you’ve got unpaid medical bills, you’re far from alone. The Consumer Financial Protection Bureau says one in five Americans is impacted by difficulty paying medical bills. 

If you’re in that group, help is available. The good news is, taking steps to remedy your medical debt relief can ease your stress.

What is medical debt relief?

Medical debt relief includes several strategies for handling your debt. You may find more than one of these approaches is right for your situation.

Whichever approach you take, it helps to start working on a solution as soon as possible. 

In a way, debt is a bit like a medical condition. The sooner you address medical debt, the easier it will be to deal with. 

Those consequences can include an ongoing drain on your finances and potential damage to your credit record. Ignoring the problem will probably cost you more in the long run. Interest and late payment penalties mean greater expense, and unpaid debts can ding your credit history.

The sooner you start pursuing medical debt relief, the sooner you can be free of the financial burden. 

Key strategies for medical debt relief

The following table summarizes some of the strategies you can use to find medical debt relief:

Medical debt relief strategyExplanation
Review bills for errorsCheck all medical bills for accuracy and double-billing to ensure you’re not overcharged.
Negotiate with healthcare and insurance providersContact providers to reduce charges and understand coverage denials.
Look for government and charity assistance programsSeek financial help from charitable organizations and government programs.
Work out a payment planArrange a monthly payment plan you can afford with your creditors.
Credit counselingGet advice on budgeting and debt management from approved credit counseling agencies.
Medical debt consolidationUse a new loan to pay off multiple debts, simplifying payments.
Debt management plans (DMPs)Consolidate payments through a credit counselor, aiming to clear debt in 3-5 years.
Medical debt settlementNegotiate to pay less than the owed amount, potentially avoiding taxes on forgiven debt.
BankruptcyLegally eliminate or reorganize debts, despite negative impacts on credit.

Here is a brief description of how each strategy works:

Review Bills for Errors

  • Go through each line of all your medical bills to check for accuracy.

  • Verify you’re not being billed for services you did not receive.

  • Double-billing is common with medical bills, so make sure you aren’t being charged more than once for the same service.

Negotiate with Healthcare and Insurance Providers

  • Contact your healthcare providers to ask if there is any flexibility to reduce the charges.

  • Once you’ve finalized the medical bills, ask for a detailed explanation of why items weren’t covered.

Look for Government and Charity Assistance Programs

  • Charitable organizations, federal, state, and local agencies and programs affiliated with hospitals and pharmaceutical companies may all offer some kind of financial assistance.

Work out a Payment Plan

  • When you’ve done what you can to reduce the amount you owe, figure out how much you can afford to pay each month.

  • Ask your creditors to accept a payment plan you can afford.

Credit Counseling

  • An experienced credit counselor can advise you about budgeting and options for managing debt.

  • The U.S. Department of Justice has a tool to find approved credit counseling agencies by location.

Medical Debt Consolidation

  • Medical debt consolidation can simplify payments and make them more affordable.

  • Debt consolidation means using a new loan to pay off more than one debt.

  • You’ll need a credit score good enough to qualify for the consolidation loan.

Debt Management Plans (DMPs)

  • Some credit counselors may help you set up a DMP to manage your unsecured debts like personal loans and credit cards.

  • The credit counselor may negotiate fee waivers or lower interest rates on your debts.

  • You make a single payment to the credit counselor each month, and they pay your individual creditors.

  • The goal is to pay off all of your debt in 3-5 years.

  • You’ll be asked to give up your credit cards while you’re in the plan, and your credit report will show that you’re in a DMP.

Medical Debt Settlement

  • This is an agreement to have a creditor accept less than the full amount owed.

  • If you are insolvent (you owe more than you own), you won’t owe taxes on the forgiven debt.

  • Once a medical debt is reported as paid, it’ll be removed from your credit report.


  • Bankruptcy is a legal process to get rid of your debts, either by wiping them out or via a payment plan.

  • You can include some debts in bankruptcy that are not candidates for debt settlement or a DMP.

  • Bankruptcy has a negative effect on your credit standing, but a good credit score is usually not the primary concern for people considering bankruptcy.

Organizations that help with medical debt relief

Nonprofit hospitals are required to offer payment assistance programs and provide you with a written list of those options. 

Government agencies can also be a good source of information about coping with medical debt. Several federal organizations offer financial resources for medical debt. Many of these organizations cater to specific groups. 

Finally, many states have agencies to help distribute financial aid and information about healthcare bills and insurance. These are generally referred to as Consumer Assistance Programs. Check for whether there is a Consumer Assistance Program available in your state. 

The path to medical debt settlement

One option outlined above can actually reduce the amount you owe: medical debt settlement.

Debt settlement involves negotiating with creditors to have them accept less than the amount owed because you can’t afford to fully repay your debts. Creditors may decide that it’s more cost effective to accept a lesser amount than to try to collect a larger sum that you might not be able to pay.

You can try to negotiate settlements with your creditors yourself. Or you can hire a debt settlement specialist to handle the negotiations for you. Typically, you’d make a lump sum offer to get rid of the debt in one swoop. Occasionally creditors will agree to a payment plan. In order to make a lump sum offer, you’d need to have money set aside. Some people choose to stop making their debt payments in order to save up funds for making offers. Missing payments is likely to seriously damage your credit standing, but your score can recover over time. Getting rid of your debt is a huge step towards financial stability. Once you’re free of those looming bills, it’s easier to work toward a better credit score by making your payments on time and keeping credit card balances low.

A debt relief program typically takes two to four years to resolve your debt issues. 

Debt settlement doesn’t typically work with secured debt like car loans and mortgages. However, since medical debt is typically unsecured, it may be a good candidate for debt settlement.

There may also be costs to debt settlement. If you work with a professional debt settlement company, you’ll pay a fee. Also, the canceled debt is considered taxable income by the IRS unless you’re insolvent. Most people who go through a debt settlement program are insolvent—meaning you owe more than you own—and don’t owe taxes on their forgiven debt.

Debt settlement could help you put your debts behind you. 

Simplifying your bills through medical debt consolidation

Another debt relief option that might save you money is medical debt consolidation. It can also make it easier to keep track of your monthly bills.

Debt consolidation involves rolling multiple debts into one. Simply put, you’d take out a new loan to pay off old debts. That way, you’d have a single monthly payment instead of several.

Debt consolidation can help you handle both medical and non-medical debt. 

Debt consolidation can simplify payments and make them more affordable. In some cases, you can lower the interest rates on your debt. You might also stretch repayment over a longer period to lower your monthly payment.

Options for medical debt consolidation include loans and low- or zero-interest balance-transfer credit cards. Only consider a balance transfer if you have a plan to pay off the debt before the promotional interest rate expires, or your debt could get a lot more expensive. The goal is to find interest rate and repayment period terms that are favorable enough to make your monthly payments affordable.

Choosing between medical debt settlement and consolidation

Both debt settlement and debt consolidation can make your monthly payments more affordable. So which is the better choice?

Debt settlement involves creditors canceling part of your debt. There is no minimum credit score required, and you could end up paying less overall compared with debt consolidation. There is usually some credit score damage, although medical debt gets special treatment. Debt settlement is appropriate if you have a financial hardship that makes it difficult or impossible to pay off all of your debts in full.

Debt consolidation requires that you have a good enough credit score to qualify for a new loan. You’ll pay off your debts in full. The loan won’t hurt your credit score unless you pay late or default.  

Getting started: Steps toward medical debt relief

Any debt relief option you choose is likely to be more effective the sooner you begin. Here are some steps to help you get started:

  1. LIst your debts and all the details about each account.

  2. Make a budget and figure out how much you can afford to pay toward your debts.  

  3. Review your debt relief options. It might help to talk to a debt expert.  

  4. Choose the option that looks best for your situation. 

  5. Commit. Getting rid of debt is rarely quick or easy. But you can do it.

Frequently Asked Questions

How long do medical debts stay on my credit report?

Medical debt is treated different from other debts. Medical debts aren’t reported on your credit report until they’ve been unpaid for a year. Then, medical collection accounts under $500 or that have previously been paid should be removed from your credit report. 

Can I be sued for unpaid medical bills?

Yes, you can be sued for unpaid medical bills. But it shouldn’t be a surprise. Lawsuits cost debt collectors money, so they’ll generally try to connect with you for payment many times before they file a lawsuit. Don’t ignore them. You have rights when you deal with collection agencies, but debts don’t go away on their own.

What should I do if I’m overwhelmed by medical debt?

Get help as soon as possible. Many people have been through this, and credit counselors and debt relief specialists are experienced in helping people. They can help you understand your options and guide you toward a solution. The sooner you start, the better those solutions are likely to be.