Consolidating medical debt is one of the strategies that you can use to get out of debt. It can simplify your repayment plan so it becomes easier to manage. And if you do it correctly, it might even help you save a lot of money.
When your debt payments are easier to monitor, you do not have to worry about missing a due date. You only have one payment to remember. The chances of you forgetting will be very small.
Not only that, you get to lower the stress that is usually associated with your credit situation. Your debt will require less effort to monitor. That will allow you to focus your attention on other things like growing your monthly income. This is one of the ways that you can increase your debt payments and get out of debt faster.
About medical debt
Here are important truths you need to know before consolidating medical debt.
It is an accumulation of various medical bills
When it comes to paying for healthcare needs, reports reveal that 79 million Americans are struggling to pay off their medical bills. Apparently, these bills have accumulated over time. A lot of people’s medical debts are a combination of past and present bills. That means a lot of their past bills have been left unpaid.
The out of pocket costs are paid using credit
Although a lot of people have health insurance, their bills are not completely covered. Not only that, there is a limit to the service providers that are affiliated with your insurance company. It is the out-of-pocket costs that end up being medical debt. Even if it is only a portion of the whole expense, it still catches them unprepared. That is why a lot of them are unable to pay for it in full.
The stress associated with a medical emergency lead to bad decisions
Experts say that people should get to know their medical coverage before they get treatments. But if you are in the midst of a medical emergency, that would be the last thing on your mind. It is a very stressful and frustrating situation to be in and you cannot completely blame people for making mistakes that land themselves in debt.
Questions to ask before consolidating medical debt
Fortunately, there are ways to pay off medical bills even as they pile up. One of the effective ways you can do this is by consolidating medical debt.
But before you consolidate your medical bills, you need to ask yourself a couple of questions first. It may be true that this is an effective way to get out of debt, but you need to make sure it fits your financial situation. Some people are better off with debt consolidation but there are those that will benefit from a different approach.
If you want to make sure if consolidating medical debt is the right option, here are a couple of questions that you need to ask yourself.
Can I afford it?
This is an option that will not give you debt reduction. At most, the reduction that you will get will be on the interest rate. But in terms of the principal balance, you are expected to pay for everything. If this is something that you cannot afford, you have to be honest with yourself. You need to look into another debt solution.
Will it effectively get rid of my debt?
This is connected with the first question. If you cannot afford it, then consolidating medical debt will not help you get rid of debt. It is not enough. The threat of bankruptcy in the face of too much medical debt is real. In fact, statistics reveal that people skip getting medical treatment because they fear bankruptcy.
But there are other concerns apart from affordability. You should also think about your ability to complete the debt relief program. Some people fail to realize that the consolidation will only make payments bearable now but it will not solve the problem. You have to identify if the medical bills will stop. If not, then you will have a never-ending debt in your hands. You cannot rely on simply consolidating because it will just exhaust your financial resources. It will just make things harder. You should probably look into another debt relief program to help with your medical bills.
Do I have collateral that I can use?
Using collateral in debt consolidation can help you lower your interest rate significantly. The question is, do you have one? And if you do, will it benefit you to use it in consolidating medical debt? If you do not have collateral, you might just want to find a consolidation option that will give you the lowest interest rate. Or if you do have one, make sure that you can pay off the debt. Otherwise, you might end up losing that collateral.