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Help with Medical Bills



Debt settlement.

Struggling or low-income families can get help from debt settlement programs. The process is in effect a form of negotiation that results in the overall reduction, if not elimination, of unpaid bills. Debt settlement is when you (or most likely a company) attempts to reduce and negotiate down the principal balance on your outstanding unpaid bills, late fees, or other debts. Find how to settle debt below.

If successful with the process, borrowers can eliminate anywhere from 30-80% of the outstanding balance. All forms of debt can be settled, including credit card, medical, possibly car loans, a mortgage, BNPL installment loans, and more. The creditor/lender will forgive this amount that you didn’t pay or the future amount due, thereby assisting you with getting back in control of your financial future over a reasonable period of time. Find more information below, as well as details on which credit card issuers or lenders offer debt settlement programs.

Types of debt that can be settled

Almost any type of debt can be settled. Of course this depends on many factors, such as the borrowers income, whether they lost their job or not or have some other form of financial hardship (sickness, divorce, disability, etc.) as well as other factors.

But in general, a debt settlement plan can assist with reducing credit card debt, payday loans, past bills that you owe on car loans, or other expenses. It can even provide a consumer with settlement on any unpaid personal loans that they may have, including from Buy Now Pay Later companies or high priced lenders such as car title loans or payday lenders.

  • In other words, these programs offers various forms of assistance for any type of consumer debt. But there are limits. Debts that can’t be normally be settled or forgiven include alimony, tax debts such as real estate / property taxes, mortgages, child support, and federally insured student loans.

Note it is possible to settle medical debt with a hospital, doctor, dentist or clinic as well. You do need to know that negotiating with a doctor or a hospital is usually easier than negotiating with other types of lenders. This is the case as health care is a service and medical providers as well as hospitals are more reluctant to sue patients, especially the low-income, disabled, seniors or uninsured. In general a health care provider, including a hospital or doctor office, is more willing to come to terms with you. Find ways to settlement medical debt.




How does a debt settlement program work?

There are really two different approaches to take. One is to try to settle debts on your own - a DIY approach. The second way to get relief is to use a free or low cost lawyer, non-profit, or other settlement company. Learn more about both options below.

Debt settlement negotiations can happen over the phone, via email, or through written correspondence. The negotiations are often facilitated by a debt settlement company, although they can also be conducted directly between the borrower and the creditor. Either process can be effective.

Debt settlement companies help borrowers, including people with no money or income, low-income parents with kids or the elderly. While the process may vary slightly based on your approach and the provider, in general debt settlement companies will offer a program to those who need help. The organization you partner with will negotiate with your creditors or collection agencies on your behalf and either charge an upfront fee or they work on a contingency basis.

Regardless of the type of account being settled (whether medical, payday loan, or credit cards) debt settlement companies typically charge about 25-35% of the balance that is eliminated under these programs. The fees are based on factors including :

  • How much you will save by settlement.
  • How much debt you owe in total.
  • The total number of accounts you have.
  • The household income and financial situation.

You need to try to make sure that you deal with any of the debt settlement companies (BBB certified) that are reputable. Be sure you read the find print and that they can negotiate to offer you the best deal as well as save you the most money on any debt that are in arrears that you have outstanding. There are also pro-bono debt settlement lawyers.





Note there are debt reduction, consolidation and free debt settlement programs from non-profit agencies as well. They focus on families with a very low-income or that are unemployed or facing a hardship, such as divorce, medical emergency or some other crisis. Debt settlement can be an option, and locate nonprofit credit counselor.

Borrowers can also settle debt on their own. They can call about their creditors, ask about hardship programs or options to forgive unpaid debt, and work out a solution. In general, this type of option is for very low-income families or people that are in a crisis, such as serious health care issues, unexpected job loss or reduction in income or other situations.

Many companies offer debt settlement programs directly to consumers who ask for them. If you enter into a program on your own you may be able to save money as you will not need to pay a third party. Find examples of the credit card companies and their settlement/foregiveness programs.

There may be other options as well, and find a comprehensive list of credit card settlement programs from all the major issuers.

Debt settlement programs and plansLike all options when it comes to trying to get out of debt, there are various pros and cons in debt settlement. There are various things to consider, such as credit impact, taxes, success rates and more. Find a more detailed analysis on should you use debt settlement.

Some customers also consider consolidating their bills, which is a different approach. Both of them can be solutions, as well as other assistance programs. Find more details and compare debt settlement vs consolidation, as they do have their differences.

Steps to settle debts

Regardless of whether you hire a company, use a free non-profit credit counselor or decide to work with creditors on your own, the process is fairly similar. The process to reduce, or ideally eliminate, unpaid debt through using settlement is below.

Negotiating with creditors. The debt settlement company or the borrower (if proceeding without a company) will then negotiate with creditors. This can be a credit card company, hospital billing department or charity care center, or some other lender. The objective is to convince the creditor to accept a one-time, lump-sum payment that is less than the total amount owed.

  • If a creditor agrees to the terms, the borrower will pay the negotiated amount. The goal is to pay a “fraction”  of what is owned, based on your current household income and assets. No matter what type of debt or expense you are trying to settle, it usually will takes 2-4 years to complete the program. The exact amount of time it takes to complete the program will depend upon many factors.







What often comes into consideration includes your total debt amount, your total income, any fees that couldn’t be waived, and other factors, such as a a disability or loss of job. Once paid, the debt is considered settled. After you compete negotiation and proceed with a debt settlement program, collectors as well as other creditors can’t come after you for the balance and they can’t sue you in most states

If a deal is worked out, then it is critical to set aside funds for settlement. The borrower typically needs to set aside money, over time, to make the lump sum payment to the creditor, whether an online lender, credit card company or someone else. The exact timeframe will vary based on the negotiation. This might involve making regular deposits into an account managed by the debt settlement company or paying the creditor directly.

Taxes and credit impact of debt settlement

After you go through a debt settlement process creditors will forgive a substantial percentage of what you owe them. The amount that is forgiven, which is then known as cancellation-of-debt (COD) income. Note that this may be taxable as per IRS guidelines. However, if the debt is settled because of a protest or challenge to what you were billed by the lender, you usually will not need to pay taxes on that amount.

It’s important to note that debt settlement can have a negative impact on credit scores. but it is less than many alternatives such as filing bankruptcy or never paying a bill. When you stop paying creditors and accumulate funds to eventually settle the debt, some of your outstanding accounts may be charged off by the creditor. What this means is that the creditors may no longer consider your unpaid bills as collectible.

  • The creditor may even decide to sell off your account to a collection agency who will then try to collect the debt from you (but as noted above this may be illegal). Settled debts are often reported as “paid-settled” on credit reports, which can be less favorable than “paid in full.”

A “Settled charge off" will impact your credit score much less negatively than a bankruptcy filing. So while there may be a impact on your credit report, it could be worse. So the bottom line is that a credit card debt settlement, or the reduction on any other bill or debt, will almost always hurt your credit score for the time being. However, it is a shorter term impact as after the account is paid off in full, your credit scores will improve gradually if you keep making timely payments towards your bills as well as any other liabilities. Of course, it is always possible to repair credit after debt settlement. But it will take time. Find more on repairing credit and FICO scores.





Debt settlement is typically a last resort for individuals who have exhausted other debt relief options, such as debt consolidation or non-profit credit counseling. It's appropriate for unsecured debts, like credit card debt, personal loans, Buy Now Pay Later financing and medical bills. It's not suitable for secured debts, like mortgages or car loans, where the lender can repossess the collateral.

Debt settlement programs are a solid option that anyone who is struggling should explore. The program is but one of the many resources available. In many cases, the provider will also offer free credit counseling and repair services. When successful, they can provide an easy way to get out of debt, including credit card and medical. It can even involve the outsourcing of the process to a specialized company, thereby saving you time.


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By Jon McNamara











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