Excessive medical bills are something that can be difficult to plan for. The reality is that even if you have medical insurance a serious medical crisis can leave you with bills that are more than you can reasonably manage.
When faced with a pile of medical bills, you basically have four options. You can work with the healthcare provider to pay them off over time, you can seek medical debt consolidation, you can attempt to negotiate your bills down (this works just like when you settle credit card debt), or you can file for a medical bankruptcy. The first two options are much better choices than filing for bankruptcy.
Today we are going to look at medical debt consolidation. When consolidating bills, you will be going to a bank or other lender and taking out a loan which you will then use to pay off your medical bills. Debt consolidation loans may be either a secured loan or an unsecured loan. There are advantages to each option.
An unsecured loan will require that your credit score be good. It can be very difficult to qualify for an unsecured loan, especially if you owe a lot of money. Obviously the advantage to an unsecured loan is that you are not placing your property at risk. The primary disadvantage is that most unsecured loans carry with them a high interest rate.
When you speak of secured debt consolidation, most often you are referring to a consolidation loan that utilizes that equity in your home. Obviously the primary down side to this option is that you are placing your home in jeopardy. Additionally, mortgage loans for people with bad credit can be very hard to come by, although qualification will be easier than getting an unsecured loan.
One thing to keep in mind is that medical debt consolidation does not always save you money nor does it ensure that your monthly payments will go down. Before you sign anything, it is critical that you understand the rate of interest you are currently paying versus what you will have to pay if you consolidate your debt. Medical debt consolidation only makes sense if you are going to pay a lower interest rate or you are able to lower your monthly payment to the point that you are able to avoid bankruptcy.
Obviously there is no way to erase debt short of filing for Chapter 7 bankruptcy. However, medical debt consolidation can be a very good strategy depending on your individual situation. You may seek the services of a medical debt consolidation company who can help you learn how to consolidate debt.
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