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If you have a huge medical debt and the hospital or provider refuses to give you a payment plan you may want to contract with a debt settlement company. These companies have debt counselors that are experienced at negotiating medical debts and are almost always able to do better than you could yourself. In fact, debt settlement is the only way to get debts reduced short of filing for bankruptcy.
While a debt settlement company will charge you a fee, the money it saves you will more than offset it and you'll still end up saving money. Also, if you have multiple medical debts and contract with a debt settlement company you will have consolidated your debts. This is because you will no longer be required to pay all your various providers. Instead, you will have a payment plan with a fixed monthly payment for a fixed amount of time. This will generally be from 24 to 48 months depending on the severity of your debt.
How debt settlement works
When you contract with a debt settlement company it will contact your providers (and any debt collectors) and notify them that it will be settling your debts. This should stop any harassing phone calls from your providers or from collectors.
To pay for your settlements, you will send the debt settlement company the money you would have used to pay your bills. Ethical debt settlement companies will deposit this money into a trust account that you control. When enough money has accumulated to settle off one or more of your debts, the settlement company will contact you and ask you to release the money. No reputable debt settlement company will use any of your money to cover its fee or to pay any other of its costs. The money will be used only to pay off your debts. At some point the debt settlement company will offer you a payment plan. Assuming you accept the plan you would then have just one payment to make a month.
Be aware that there is one down side to using a debt settlement company. Your creditors will treat your debt as paid in full but this is not how it will be reported to the three credit reporting bureaus. It will be reported as "settled," "settlement" or "settled for less than full amount." This will stay on your credit reports for seven years. It will also damage your credit score. However, the damage won't be as severe as if you had declared bankruptcy.
Medical debt can be staggering. We read recently of one person that thought he had planned a procedure where his insurance would cover everything. But then he was hit with a bill of $117,000 from a surgeon who had been called in at the last minute. If you do find yourself drowning in a pool of medical debt, take heart. As you have read in this article there are ways to control it and without having to take on a second or even a third mortgage.