How to Get Out of Medical Debt

Medically Reviewed by Dan Brennan, MD on August 18, 2021
4 min read

Medical debt is the number one reason for personal bankruptcy in the United States. Your personal finance is an important part of your health and wellness, so it’s important to manage. 

The first step to getting out of medical debt is reviewing your medical bills. Ask for itemized bills, go over your bills carefully, and compare them against your insurance plan. If you’re certain the insurance company should be covering the expenses, contact them.

If they refuse to make adjustments, file a dispute. You can do this by writing a letter that states you are challenging the bill. Mail the letter using registered mail within 30 days of a collection agency notice.

Getting a discount or an installment plan can help you pay your medical bills with less stress. You may be able to negotiate directly with the hospital or doctor. They might agree to lower the amount you owe if you pay it in advance. You can also ask for a discount rate or the cash rate if you can pay in cash. Some providers are willing to give up to a 20% discount right away.

If you can't afford to pay the bill, ask for an installment plan. Many providers will agree to let you pay by installments and often with 0% interest.

Get the agreement in writing, and ask for it to state that they won’t send the bill to a collector. Make sure you pay your installments on time. Always keep with your agreement and don’t miss any payments.

Hospitals have financial assistance programs, and many providers have information on where to get financial assistance. If you qualify, apply to these programs. Any amounts you qualify for can be applied to your bill as a payment, which can lower the amount you owe.

If you have a specific disease or disability, check with charitable organizations for your health condition. They might have financial assistance programs or grants you can apply for. Some of these programs might help pay for medications. You can use the money you save to pay against your bill.

If you are eligible, Medicaid might pay for some of your existing bills. Your coverage can start as early as the beginning of the month 3 months before the date you apply. If you would have qualified within those 3 months and had medical bills during that time, your bills may be covered.

Figure out if you can sell any of your assets to help generate money. These assets can include things like jewelry, your car, or recreational vehicles like a boat or motorcycle. Maybe you can sell your home and downsize to something smaller and cheaper. If you rent, look for a place with cheaper rent so you can save money.

If you sell your home or personal property, pay off the existing loan or mortgage. Then use the money left over to pay your medical bills.

Sometimes you can also use your assets to draw a loan. You may be able to consolidate your medical debt through a second mortgage on your house or a home equity line of credit.

You draw the money from the loan to pay your bills outright and then pay the loan, which might have a lower payment. The drawback is that you might need to use your house as collateral. This means that if you don’t pay the loan, the bank or finance company can take your home.

Get creative with other ways to find money for your medical bills. Online fundraising and fundraising events are a great way to accept donations. Ask your friends, family, church group, or other organizations in your community to help you raise money.

The best way to handle medical debt is to deal with it right away. Talk to the hospital or your insurance provider as soon as possible. This way, you won’t miss important deadlines, and they may be more willing to help you.

Pay money toward your bills right away, but don’t use credit cards. If you do, you may have to pay high interest rates — adding more to your cost. Waiting to pay may also lead to extra fees and interest, which means you’ll be paying more in the long run. 

If you need help with financial planning or credit counseling, talk to your bank or a credible finance company for guidance.

Show Sources


American Heart Association: “Medical Assistance Programs.”

Cancer Advocacy Project City Bar Justice Center: “A Guide to Medical Debt: Your Rights and Options.”

Consumer Finance Protection Bureau: “Avoiding medical debt.”

Federal Trade Commission Consumer Information: “Getting Out of Debt.”

Michigan State University: “Medical debt can wipe you out.”

StepChange Debt Charity: “Selling assets to pay off or clear debt.”

Wisconsin Department of Health Services: “Coping with Medical Bills and Debt.”

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