medical debt

by Aidan Kang, CFA
Senior Writer
UPDATED: March 15, 2023

Health issues almost always come unexpectedly, making it hard to anticipate and prepare for at times. On top of being emotionally and physically draining, it can also be financially straining to deal with the medical bills that come with it. 

Many people struggle with paying off medical bills. And when they can't, it can lead to medical debt, unwanted calls from collection agencies, and a damaged credit score.

We understand that it can be difficult to know where to turn for help, that's why we've created a guide in hopes of easing this time for you.

There are a few steps you can take to get out of medical debt and avoid collections.

Here's how to get out of medical debt and take control of your finances.

Review Your Medical Debt With Your Provider

Medical bills are not always accurate in the United States. It is important to review your medical bills carefully and make sure that all charges are accurate and necessary. Get a breakdown of the bills you owe first and make sure you review it thoroughly. 

Assess Your Financial Situation

Next, you're going to want to assess your financial situation to determine your ability to pay your medical debt and create a repayment plan. To do this:

  1. Gather all of your financial information: This includes all of your bills, income, and expenses.
  2. Create a budget: Use your financial information to create a budget that shows how much money you have coming in and going out each month.
  3. Prioritize your debts: Make a list of all of your debts, including the medical debt, and prioritize them based on the interest rate and how soon they are due.

Once you have a good idea of your where you stand financially, you'll be able to identify how much money is available to put towards your medical debt each month, and determine which debts should be paid off first based on factors such as interest rates and due dates. Now let's discuss your options to getting rid of your medical debt.

Request Medical Debt Financial Assistance

Now that you've determined the actual amount of your bill and how where you stand financially, you can take steps to further reduce your medical debt. First, contact your medical provider and ask about financial assistance programs, discounts, or payment plans. You're going to want to do this quickly so your medical provider knows that you are taking steps to pay off your medical debt. More importantly, you're going to want to do this before your debt gets assigned to a third-part collection agency.

Many hospitals and healthcare providers offer financial assistance programs for those people who can't afford to pay their full bill. Additionally, you may be able to apply for government assistance programs if you meet the eligibility requirements. Some assistance hospitals provide include:

  • Financial assistance for uninsured patients: These programs may provide discounts or reduced fees based on the patient's income and financial situation.
  • Charity care: Some hospitals offer charity care programs that may provide free or reduced-cost care based on the patient's income and financial situation.
  • Payment plans: Hospitals may also offer monthly payment plans to patients to help them pay off their bills.
  • Medicaid and Medicare: Many hospitals will accept Medicaid and Medicare as a form of payment, these programs are designed to help low income and elderly citizens.
  • Community health centers: Hospitals may be affiliated with community health centers that provide primary care services to underserved communities on a sliding-fee scale, based on a patient's ability to pay.

Get Help From A Non-Profit Advocate

If you need help getting information negotiating with medical providers and credit companies, a non-profit advocate can do it on your behalf and provide you with information on your rights and options for managing medical debt. They can also connect you with legal aid organizations if you're having trouble doing it on your own.

Some popular non-profit organizations that can help with medical debt include:

  • RIP Medical Debt: This organization uses donations to purchase and forgive medical debt for individuals and families in need.
  • The Patient Advocate Foundation: This organization provides individual case management, advocacy, and referrals for financial assistance to patients with chronic, debilitating, or life-threatening illnesses.
  • The Medical Debt Relief Project: This organization partners with hospitals and healthcare providers to help patients understand and navigate the medical billing process, and connect them with resources to reduce or eliminate their medical debt.
  • HealthWell Foundation: They provide financial assistance to eligible individuals to cover the cost of their insurance premiums, copayments, coinsurance, and deductibles.

Be sure to choose the non-profit that best aligns with your specific needs.

Understand The Priority Of Your Medical Bills

Hospitals normally send you collection notices and billing statements before taking more severe action to collect medical debt. Depending on a hospital's policy, you'll generally have about a year before a hospital may take more aggressive collection methods such as reporting the debt to a credit bureau, turning the debt over to a collection agency, filing a lawsuit, and, in some states, file to seize your assets.

When you have multiple debts, it's crucial to have a plan of attack. Understanding that you're medical debt isn't the top priority as opposed to your debts that have interest-rates will help you save yourself the most money in the long run.

Guide: Which Debt Should You Pay Off First? The Ultimate Guide

Dealing With Your Medical Debt Collectors

If your medical debt is already in collections, it means your hospital or medical provider has assigned your debt to a third-party collection agency. This is when you start getting bombarded with calls from debt collectors for your medical debt. Here's what you can do to deal with collectors.

First things first, send them a letter to request that they stop contacting you. Once they receive your letter, they're only allowed to contact you to let you know when they're taking specific action, like filing a lawsuit. Another tip, block their phone number too. That way, they can't keep calling you.

If the debt collectors are breaking the law by harassing you or making false statements, file a complaint with the Federal Trade Commission and your state attorney general. And if they just won't stop, it may be time to seek legal advice. A lawyer can help you understand your rights and take the appropriate actions.

Remember, medical debt is different from other types of debt, so always communicate with your medical providers and insurance company to understand the billing process and try to reach a payment plan before the debt reaches a collection agency.

Avoid Putting Your Medical Debt On To Credit Cards

You might get overwhelmed when you get your hospital bills and automatically put them on your credit card to manage paying it off more easily. However, you really shouldn't do this for two reasons:

1. Putting your medical bills on your credit card automatically converts it to credit card debt and let me tell you, that's far more costly. The interest rates are higher and that makes it harder to pay off in the long run.

2. Because you have more time to pay off your medical bills, you're better off taking advantage of the options available to you such as income-driven repayment plans, medical hardship plans, debt consolidation, credit counseling, or medical bill advocacy which can help you find a more manageable and affordable way to pay your medical debts.

If you've already committed your medical debt is to a credit card, you need to compare the interest rates of your debts to know if you can afford to make minimum payments on that and focus on the high-interest debt.

Bankruptcy And Medical Debt

Filing for bankruptcy is a serious decision that should not be taken lightly. We don't recommend filing for bankruptcy for medical debt unless you've there may be other options available that can help you manage your debt without the long-term consequences of bankruptcy.

Bankruptcy can have a significant impact on your credit score and make it difficult to get credit in the future. It will stay on your credit report for up to 10 years and it can make it difficult to get credit, a mortgage, or a rental apartment in the future.

What Happens If You Don't Pay Your Medical Debt?

If you don't pay your medical bills, your medical provider may send your bill to a collection agency and that can really hurt your credit score. They may even take legal action against you to recover the unpaid debt. Plus, they may even refuse to treat you again until the bill is paid.

Now, if the bill goes to a collection agency, they're going to be hounding you and maybe even file a lawsuit against you to recover the debt. So, don't ignore your medical debt, that's a big mistake.

Will Your Medical Debt Affect Your Credit Score?

Medical debt can have a significant impact on an individual's credit score. If medical bills are sent to collections, it can result in a collection account being reported to the credit bureaus, which can lower credit scores and make it more difficult to obtain credit in the future.

Even if the medical bills are paid, they may still appear on credit reports and can negatively impact credit scores. This is because credit reporting agencies have a certain time frame to update the information, and it may take some time for the paid status to reflect on the credit report.

Moreover, if the collection agency files a lawsuit against you, this information may also be reported to the credit bureaus which can further damage your credit score. Additionally, if you have a high amount of medical debt, it can increase your credit utilization ratio, which can also negatively impact your credit score.


Reviewing your bills and assessing your financial situation can give you a clearer picture of what you're dealing with. Seeking financial assistance programs, payment plans and getting help from non-profit advocates can be helpful. Remember, the quicker you take action, the better your chances of avoiding collections and protecting your credit score. It's important to know that you're not alone in this and that there are resources available to help you navigate through this difficult time.