If your finances have taken a severe hit due to medical expenses, you’re far from alone. Last year, an astounding 137 million Americans – over 1/3rd of the U.S. population – reported that they were facing financial hardship due to medical bills. In all likelihood, this number has only increased as the COVID-19 pandemic put millions out of work and untold numbers into hospital beds.

Unlike most other forms of debt, medical debt is often outside of our control, which only adds to the stress. We can’t predict when we or a loved one will experience some kind of medical emergency; the best we can do is prepare for the unexpected.

And, when you consider the fact that 25% of Americans have no emergency savings at all, it’s clear to see why medical bills are such a pervasive contributor to financial stress. Very few are well-prepared to handle the costs of a medical emergency.

More than likely, there are several anxiety-inducing questions and concerns bouncing around your head right now – and we want to help you put them to rest as much as we possibly can.

Read more: Financial Stress and How to Navigate Money Anxiety

In this article, we’re going to cover a few ways you can tackle your medical debt head-on so you can get back to living life on your terms. This piece will focus on ways to effectively pay off already-existing medical debt, covering money moves and financial products that can help make managing your debt easier.

For tips on how to negotiate and save money on medical bills before they’re finalized, click here.

First things first

If you haven’t already created a monthly budget, now’s the time to get started. Depending on the amount of debt you’re in, this can a scary undertaking you’d likely rather avoid – but trust us, the peace of mind you’ll feel once your budget is up and running will be worth it.

Before getting into the rest of the article, we highly recommend you read through How to Create a Monthly Budget and follow the advice given there (and download our free budget template!) Once you have a solid understanding of how your income stacks up compared to your monthly expenses, you can start building a concrete plan to eliminate your medical debt.

Start by cutting expenses

Whenever you’re facing high amounts of debt, medical or otherwise, the first thing you should do after creating your budget is look for opportunities to cut expenses. Cancel the subscriptions to those streaming services you rarely use, start eating out less frequently, and stick to purchasing only the bare necessities. The more money you save by cutting expenses, the faster you can be free of your medical debt.

If you can increase your income during this time, that will help immensely too – but it’s also much harder to do. Working a side gig like ridesharing, or selling your old belongings online could help you put some extra money in your pocket quickly, and they won’t take up too much of your time. Once all of your immediate needs are taken care of, you can use any extra income to expedite your medical debt paydown journey.

Read more: How to Handle Bills in an Emergency

Pick a debt paydown method

If cutting your monthly expenses and/or adding to your income frees up enough money that you can manage your medical bills, that’s great! (If not, skip forward to the “common ways…” section.)

So, what’s the best strategy to start paying down your debt now that you’re adequately prepared?

We recommend you tackle your medical debt with either the debt snowball method or the debt avalanche method – but ultimately, the choice is up to you. We’ll briefly review both methods here, but for more information on each, take a quick read through “How to Pay Off Debt Using the Debt Snowball Plan”.

Debt Snowball

In a debt snowball, you order your debts from smallest to largest balance. You make the minimum payment on every debt but the smallest one. For the smallest debt, you’ll put as much money as you can comfortably afford towards the balance; once it’s paid off, you move onto the next smallest until you’re completely debt-free.

This method is great if you’re looking for quick wins. You’ll be able to pay off each individual debt faster, and that sense of accomplishment can really help you stay motivated along the way. If you’re more interested in saving money than quick wins, the debt avalanche method may be more up your alley.

Debt Avalanche

In a debt avalanche, you focus on paying down debts with the highest interest rates as opposed to the ones with the lowest balances (like in the debt snowball.) Start by ordering your debts from the highest interest rate to the lowest and tackle the highest interest rate debt first.

It’ll take you longer to pay off each individual debt, so you won’t be able to rely on the quick wins for motivation. But, once everything is said and done, you’ll have saved much more money with the debt avalanche method.

Again, the choice is yours – but pick the method you think you’ll have the easiest time following. A well-followed plan will be much more effective in the long-term than one you’ll struggle with, even if that plan could save you money over time.

Common ways people manage medical debt when it’s unaffordable

If cutting your expenses and increasing your income hasn’t helped make your medical bills more manageable, it’s time to start considering your next move. In this section, we’re going to highlight a few of the common ways people get their medical debt under control when it’s unaffordable.

Explore financial assistance

While you’ll more than likely have to ask for financial assistance, most hospitals won’t be surprised if you’re unable to handle your medical debt all at once. If you can show that you’re struggling to make ends meet, you may qualify for free or reduced-cost care.

Different hospitals have different criteria for financial assistance, so you’ll have to do some research to find out if you qualify. Your hospital may have some information about its financial-assistance programs on its website. If you don’t find any leads there, try giving their customer service department a call.

You may also be able to work out a payment plan with your hospital if you need some extra time to pay your debt. After all, they’d rather receive the money you owe over an extended period of time than not at all. So, don’t be afraid to ask questions! You may be surprised at the amount of assistance you qualify for.

If you’ve gone down the financial assistance route but still need some extra help in managing your medical debt, keep reading. Up next, we’re going to cover a few financial products and services you can use to get your medical debt under control.

Credit Cards

Credit cards are a commonly used and widely accepted payment method for all kinds of expenses, including medical expenses. Picking up your credit card might be your first thought when it comes to dealing with unaffordable medical bills, but first – what are the pros and cons of paying off medical debt with a credit card?

Pros of paying off medical debt with a credit card

Convenience: When you don’t have cash available, credit cards can help you cover procedures and medical expenses with ease. A simple swipe (or entering your card information online) is all it takes. And, if you don’t already have a card, you can apply for and get one almost instantly – as long as you meet the credit requirements.

Promotional offers: If you use a credit card with a 0% APR period to pay off your debt, you won’t accrue any interest on your balance until the promotional period ends. Depending on the offer, you could have a period of 12 – 18 months to chip away at your debt without paying a dime in interest. When it comes to paying off debt, sometimes all you need is more time – and a credit card with a 0% APR period could provide you that luxury.

Cons of paying off medical debt with a credit card

High-interest rates: Before you use your credit card to pay medical bills, you should be aware that most medical debts do not carry interest. So, if you put your medical debt on a credit card that has an APR greater than 0%, your balance will start accruing interest – and it accrues fast.

It’s wise to only consider paying medical debt with a credit card if you’re eligible for the 0% APR offer. Otherwise, you’ll be spending far too much in interest. Even then, make sure that you’ll be able to pay off the balance before the promotional period ends. Once it’s over, your rates will hike back up, and you could be in much more debt than you previously were.

Can hurt your credit score: If you have any concerns that you won’t be able to keep up with payments, you may want to consider an option other than credit cards. Missing and late payments can wreak havoc on your credit score, leaving you feeling the financial repercussions for years to come. And, if you have a card with a 0% APR and miss a payment, you could lose the promotional interest rate – making your debt that much more costly in a flash.

Personal Loans

A personal loan is a sum of money you borrow from a lender and pay back in fixed monthly payments over a set period of time. They’re commonly used to consolidate debt, make home improvements, and you guessed it – pay for medical expenses. So, what are the pros and cons of paying off medical debt with a personal loan?

Pros of paying off medical debt with a personal loan

Convenience: A simple 5-10-minute application is all it takes, and if you’re approved, the money could be in your account by the next business day. When it comes to medical expenses, time is of the essence; with a personal loan, you can rest easy knowing the money you need won’t take long to arrive (as long as you’re approved.)

More time to pay off debt: Personal loans commonly have terms ranging from 3 to 5 years. If you seek out a personal loan to pay off medical debt, you pay off the debt chunk-by-chunk over the length of the term, which could help make your medical bill debt more manageable.

Lower APRs than credit cards: In general, personal loans have significantly lower rates than credit cards. Remember, we only advise paying medical debt with a credit card if you qualify for a 0% APR offer – but, if your options come down to a credit card with average rates or a personal loan with average rates, you could save much more money by moving forward with a personal loan.

Cons of paying off medical debt with a personal loan

Need to have decent credit: If your credit isn’t great, you may have trouble qualifying for a low-interest rate personal loan, or you may be denied from taking out a loan altogether. The better your credit, the better rates you’ll qualify for. Applicants with poor credit histories will likely see much higher interest rates, and they could end up paying a lot more than they bargained for in interest.

Read more: 6 Tips for Building Your Credit

Can hurt your credit score: On-time payments are the biggest factor affecting your credit score. Just like with credit cards, if you’re not sure you’ll be able to keep up with your payments, remember: you could severely impact your credit score by not repaying your loan according to the agreed-upon terms.   

Filing for Bankruptcy

If your medical debt has grown to the point that you’re considering bankruptcy, you’re part of a much larger group than you might first imagine. Last year, 66.5% of all bankruptcies were tied to medical issues – either because of the associated costs or time out of work.

There’s no denying that bankruptcy serves a valuable purpose, and it can help people get out of mass amounts of debt. At the same time, bankruptcy leaves a mark on your credit report that can make it extremely difficult to qualify for financial products in the future and can even impact your ability to get a job.

For these reasons alone, bankruptcy is not an option that should be considered lightly. Before you make any major decisions, we recommend you read through our article “An Alternative to Consider Before Filing for Bankruptcy”.

In that piece, we cover the many benefits of seeking assistance from a nonprofit credit counseling agency like the NFCC. If you reach out, a credit counselor will closely examine your situation and provide personalized, actionable advice to help you start getting your finances under control.

Better yet? Most of the time counseling is completely free of charge. NFCC counselors have seen every financial situation imaginable, including yours – so even if you’re not considering bankruptcy just yet, give them a call. At the very least, you’ll walk away with a better understanding of your finances and you’ll be well aware of the options that are available for you.

Click here to get in contact with an NFCC Certified Financial Counselor today.

Now’s the time for action. So – get that budget created, start cutting down on expenses, and explore the options we’ve reviewed here today. Good luck tackling that medical debt head-on – we’re rooting for you.