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How to cure your medical debt with a personal loan

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Man and woman looking at their bill with disappointment |

If unpaid medical bills are contributing to your sleep deprivation, you're not alone. More than half of the debt listed on consumer credit reports comes from medical expenses, according to a report by the Consumer Financial Protection Bureau, and 19.5% of credit reports have at least 1 outstanding medical bill listed by a collection agency.

The average overdue medical bill in 2014 was $1,766, according to The Advisory Board Co., a research and consulting firm that serves the health care field and other industries.

"We expect that medical debt could become a bigger problem now that more consumers are responsible for paying higher deductibles and larger co-pays," says Thomas Nitzsche, spokesman for ClearPoint Credit Counseling Solutions in Atlanta.

Kyle Winkfield, managing partner of O'Dell, Winkfield, Roseman & Shipp in Washington, D.C., worked with a client who had $48,000 in medical debt that he accumulated when he lacked health insurance and needed 2 heart procedures.

"This client was able to qualify for a personal line of credit at his credit union and we worked out a budget to help his cash flow so he was able to repay that debt in less than a year," Winkfield says.

If a personal loan is your best option to pay off medical debt, check out the loan rates at

Negotiating medical debt

Before you start investigating ways to pay your medical bills, Nitzsche says you should take the following steps:

  • Make sure the bill is correct. "80% to 90% of medical bills have errors, so be sure you aren't looking at duplicate charges before you start a repayment plan," Nitzsche says.
  • Ask about financial aid for your medical bills. While Nitzsche says medical offices rarely offer financial aid, nonprofit hospitals have an obligation to provide consumers with some support. He says a 0% interest repayment plan could be available if you can explain your financial hardship to the hospital billing department.

    "Years ago I faced a big hospital bill myself, and I was able to get 60% of the bill written off," Nitzsche says. "I repaid the rest over a couple of years with no interest."

    He says some doctor's offices will offer you a discount on your bill if you pay in full or will allow you a long-term repayment plan.

  • Make sure your insurance coverage is correct. Carefully read your explanation of benefits and make sure all insurance payments have been credited before you begin investigating repayment options, says Nitzsche.

Medical debt repayment options

Once you have your final bill in hand, Winkfield says you should compare repayment options.

"Even if the hospital or medical office has offered you a repayment plan, you need to find out what the monthly payment is, how much interest you're being charged and when the bill will be paid in full," he says. "You need to comparison-shop on everything, including your medical debt repayment options."

If you don't have the cash to pay the debt in full, aren't offered a repayment plan by the medical facility or can't afford the payments they require, you can look at paying the bill with a credit card or a personal loan.

"A personal loan can be the right option, if it has a lower interest rate or has a more extended repayment period than a plan offered by a hospital, that will lower your payments to help your cash flow," Winkfield says.

Nitzsche says personal loans typically have a lower interest rate than standard credit cards, although he says consumers with good credit may qualify for a credit card with a low promotional rate or balance transfer that could be used to repay medical debt.

"The problem is that the promotional rate usually lasts for 12 to 18 months, so if you can't pay the balance in full during that time, you could end up paying a higher interest rate after the initial term," Nitzsche says.

You'll find the best personal loan rates at

He says an advantage of a personal loan is that you usually have a fixed interest rate and a fixed repayment term of 12 to 48 months that can make it easier to fit into your budget.

"Your loan terms will depend on the lender and on your credit, but you usually need to have good credit to qualify for a personal loan," Nitzsche says.

If you've got medical debt dragging you down, a personal loan may be the lift you need.


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