At a Glance

If you or a loved one has recently experienced a medical emergency, the bills probably are piling up. And with many bills creating a large amount of debt, it can feel overwhelming and impossible to pay off.

If you’re facing a mountain of medical bills, you may be wondering if you can consolidate medical debt or if medical debt consolidation is a good idea in the first place. Here’s what you need to know.

What is medical debt consolidation?

Medical debt consolidation is the process of taking out a loan to pay off multiple medical bills. You’ll then make only one payment toward the debt consolidation loan. The purpose of debt consolidation for medical bills is to streamline payments and ultimately pay less interest over time by combining all bills into one lower monthly payment.

How to consolidate medical debt?

There are several choices when it comes to medical bill consolidation.

Debt consolidation loans

Personal loans can be a great option for medical debt consolidation if you find a lender with a low interest rate.

And if you get a great interest rate, the monthly payment can be manageable over the life of the loan. But be cautious about hidden fees like loan origination fees, and make sure you’re in agreement with the repayment terms before you sign.

Balance transfer credit card

A balance transfer credit card is a popular option for debt consolidation if you use a credit card to pay for medical bills. And if you can lock in a 0% introductory APR offer and pay down your medical debt in that introductory window, you can save a lot of money on interest.

Lines of credit

If you have access to a secured line of credit, like a home equity line of credit (HELOC) or home equity loan, you can consider taking out money to pay off medical debt. These lines of credit generally have lower interest rates than an unsecured personal loan

But you’ll need to have a plan in place to pay back debt quickly. If a home equity loan or HELOC goes unpaid, you could risk losing your home.

When medical debt consolidation is a good idea?

Debt consolidation can save you money if the medical bills you’re paying off are accruing a lot of interest, and you’re able to get a loan with a lower interest rate than what you were paying. But keep in mind that you’ll need to have a solid credit score to be approved for a good interest rate on a loan.

If your medical bills are charging low or no interest, it may not be the best time to consider a debt consolidation loan. Shifting several low or no interest payments to one interest-bearing loan could end up hurting you financially over time.

Does medical debt consolidation affect credit?

When it comes to your credit report, medical debt is treated differently than other types of debt like credit cards or personal loans. For example, if you’re working directly with your healthcare provider to pay bills, the debt generally isn’t reported to the major credit reporting bureaus (Experian, Equifax, and TransUnion).

Medical debt could affect your credit score if it reaches collections. There is a grace period for medical bills in collections, though, and they won’t actually appear on your credit report for 180 days. That means you have time to work with collections to reconcile the debt before it has damaging effects.

It’s important to understand that these protections don’t apply once you consolidate medical debt. If you choose to take out a debt consolidation loan or use a credit card balance transfer, the debt is no longer marked as medical and becomes like any other debt you’d have on a personal loan or credit card. And that means any delinquencies are reported to the bureaus and may have negative implications for your credit score more quickly.

Alternatives to medical debt consolidation

If you’re on the fence about medical debt consolidation, you may find success in an alternative option, like:

  • Credit counseling: Many nonprofit credit counseling agencies can help you create a debt consolidation program or debt management plan. In these arrangements, you’ll make a single monthly payment to the agency. Then, they’ll take care of ensuring proper payments go to all of your creditors. This can help immensely if you struggle to get the money out of your account to creditors on time.
  • Medical facility payment plans: Sometimes, the medical facility where you incurred the charges can help set up a payment plan. You may end up paying less each month over a longer period. But, this debt is generally not reported to the credit bureaus, and likely won’t help or hurt your credit score.
  • Negotiating: Sometimes, simply calling the provider or hospital to explain your situation can result in a discount. But be wary of services that charge you money to negotiate on your behalf. Instead, choose to work with local nonprofits or free programs through the medical provider.

If you’re deep in medical debt, you may be desperate for a way to decrease or eliminate your monthly payment. And in the right situation, medical debt consolidation can be a good idea. But be sure to assess your financial situation, credit score, and alternative options before committing to a medical debt consolidation loan.

Frequently asked questions about medical debt consolidation

Can you use debt consolidation for medical bills?

When you take out a debt consolidation loan, you can request the lender send some of the funds to pay off medical debts from your provider or in collections.

Related: How to Pay Off Debt in Collections