Managing medical debt can seem like a big challenge. These expenses are often unexpected and can be a lot even with insurance. Still, managing your medical debt alongside your regular expenses is possible. Medical debts can damage your credit score if they are sent to collections. There are a lot of ways to minimize your medical debt and pay it off without affecting your credit score but you will need a strategic plan.
For starters, you can look into loans for medical expenses that offer low-interest rates and easy repayment terms. However, because of their quick release time, medical loans tend to have high-interest rates and repayment terms that might not be favorable for everyone. We have compiled a list of dos and don’t to keep in mind while paying off your debt.
What not to do while paying off your medical debt
- Don’t ignore the calls and emails
The worst thing you can do is ignore your healthcare provider’s calls and emails. Hospitals don’t send your debt into the collection until 90 to 120 days, it will vary with the organization. But if you ignore their calls or show signs that indicate that you won’t be paying it off, they will be forced to send your debt into a collection. Once it’s in the collection, it will go on records for 7 years and affect your credit score.
- Using existing credit cards to pay off the debt
Using your credit card to pay the medical debt off is a quick fix that’s not recommended. The debt will be gone but you will have a double-digit interest rate if you aren’t able to pay the debt off in full balance. If you must, look into getting a medical credit card that offers low interest or no interest at all.
What to do while paying off your medical debt
- Medical debt loans
These are unsecured personal loans that you can use to pay off your medical debts. Getting a personal loan for medical debt might be best after you have exhausted other options, such as a medical credit card, or payment plans because these loans come with additional interest rates, and fees, and will affect your credit score if you miss repayments. The loan amounts can range from $1,000 to $100,000.
- Zero-interest credit cards
If you are not eligible for a payment plan or medical credit card, then 0% interest credit cards can be really helpful. But these credit cards require you to have a really good credit score. Make sure you pay off your balance before the promotional interest period runs out and the interest rate kicks in. Late repayments or missed repayments will impact your credit score.
- Medical advocates
If you’ve had an intensive procedure or an extended stay in the hospital, the medical bill would be huge. A medical bill advocate can help you negotiate the numbers. These advocates are experts in reading and understanding medical billings. They can also spot potential errors or overcharging which are all too common in medical bills. They can help you reduce the numbers.
Conclusion
Unpaid medical bills won’t harm your credit score unless they go into collections. If they are sent to collections, all three credit reporting agencies won’t add the unpaid medical debt in collections to your credit report unless it’s been due for more than 365 days and the initially reported collection account balance is at least $500 or more. This gives you enough time to dispute billing, negotiate your bill amount, and work out a solution without damaging your credit score. We hope this gives you an idea of the dos and don’ts to keep in mind while handling medical debts.