How to Get Out of Medical Debt

Even if you have a strong budget, a medical emergency or surprise doctor’s bill can throw a rock in your spending plan. As of 2024, over one-third of U.S. households had medical debt, and 21% had a past-due medical bill.1 If you’re wondering how to get out of medical debt, you’re in the right place. Let’s break down the details, including the ways medical debt can affect your credit score.

How to get out of medical debt

Paying off debt can take time, and it may feel overwhelming if you’re up against high-balance medical debt. You can start by getting strategic about paying it off. That can reduce stress and help protect your credit. Below are some actionable steps to get moving in the right direction.

1. Review your bills for errors

If you haven’t received an itemized bill, contact your medical provider and request one. Be on the lookout for duplicate charges, services you never received but are being charged for, or services that should be covered by your insurance but aren’t. In some cases, the culprit could be as simple as a medical coding error.

You can bring the mistake to your medical provider and ask them to update your bill. Even small corrections could reduce your out-of-pocket costs.

2. Negotiate directly with your provider

Assuming your bill is correct, one option is to negotiate directly with your medical provider. For example, some providers may extend discounts to those who are uninsured. In some cases, that could take as much as 30% off your bill.² You might also reduce how much you owe by paying your full bill in one lump-sum payment. Every health care provider is different, and these discounts aren’t guaranteed, but it’s definitely worth asking.

3. Ask about financial assistance

Some hospitals offer financial assistance programs to those in need. That may be worth looking into if you’re experiencing financial hardship, whether that’s a loss of income or increase in household expenses. It could reduce your out-of-pocket costs for one-off medical bills and ongoing treatment. If this is an option, clarify your medical provider’s eligibility criteria.

You can also explore relief programs like Medicaid or Children’s Health Insurance Program (CHIP). These are joint programs between the federal government and states that provide free or low-cost health coverage to those who qualify.

4. Set up a payment plan

Your medical provider may offer payment plans that can break up your total amount owed. That may allow you to find an affordable monthly payment that works with your budget. In-house payment plans may come with low or no interest. Alternatively, you might opt for a medical loan or credit card, but be aware that interest rates can be on the higher side.

5. Apply for medical debt forgiveness programs

Some nonprofit organizations focus on helping those who are burdened by medical debt. You might also find relief at the state or local level. For example, Vermont has a medical debt relief program for eligible residents who meet certain income and debt requirements.³ You can check to see what options may be available in your area.

6. Dispute inaccurate medical debt on your credit report

Check your credit report to see if there’s anything there that shouldn’t be. An inaccurate medical bill could be hurting your credit score, especially if it’s in delinquent status or has been sent to collections. Here’s how to dispute credit report errors:

• Visit AnnualCreditReport.com and get copies of your credit reports. You should have one from each of the three major credit bureaus (Experian, Equifax and TransUnion).
• Review all three for accuracy. Common credit report errors include accounts that don’t belong to you, incorrect account balances, wrong payment status, duplicate accounts, and closed reports reported as open.
• Gather any supporting documentation: That might be a bank statement showing that you’ve repaid a medical debt that’s still listed on your credit report, or a letter from a medical provider stating the correction that needs to be made.

7. Consider medical debt consolidation

You can do this in a number of ways. The goal is to bring stray medical debts under one new balance.  

Taking out a debt consolidation loan

This is an entirely new loan that you use to absorb your outstanding medical debts. You’ll then have one new balance and monthly payment. But a high interest rate could leave you paying more in the long run, so it’s wise to compare rates and lenders.

Some personal loan lenders have annual percentage rates (APRs) as high as 35.99%. Loan origination fees may also apply. Having a strong credit score could help you qualify for more favorable loan terms.

Opening a balance transfer credit card

If your existing medical debt is on credit cards, one option is to roll those balances onto a new card that has a 0% introductory rate. Paying off the balance within that promotional period can allow you to avoid interest altogether, but the APR could be on the higher side afterwards. A balance transfer fee may also apply. This is typically 3% to 5% of the transferred amount.

How medical debt affects your credit

Whether medical debt will affect your credit depends on the size of your unpaid balance, your account status, where you live and your overall credit profile.

When medical debt appears on your credit report

The three major credit bureaus no longer include medical debt under $500 on credit reports. The Consumer Financial Protection Bureau (CFPB) issued a rule in early 2025 to remove all medical debt from credit reports, but that rule was struck down later that year.⁴

Having said that, medical debt might wind up on your credit report if:

• You stop making payments and
• The account is sent to a collections agency and
• The debt is $500 or more and at least one year old

If you default on medical debt that exceeds $500, that may or may not appear on your credit report. The following 15 states either prohibit credit reporting agencies from including medical debts on credit reports, prohibit lenders from considering medical debt information, or don’t allow health care providers and collection agencies to report medical bills to credit bureaus.⁵

• California
• Colorado
• Connecticut
• Delaware
• Illinois
• Maine
• Maryland
• Minnesota
• Oregon
• New Jersey
• New York
• Rhode Island
• Vermont
• Virginia
• Washington

What to do if medical debt goes to collections

Your payment history makes up about 35% of your FICO Score. This is why defaulting on a medical bill can negatively affect your credit. If this happens, the medical provider might sell the account to a third-party debt collection agency that will try to collect what you owe. This isn’t ideal, but you can still take action to prevent further credit damage.

1. Verify the debt. Check your credit report for any accounts that are in collections, then make sure the debt is indeed yours and not the result of identity theft. Again, you can dispute credit report information that you believe to be inaccurate.
2. Negotiate a settlement. If the debt is legitimate, you can contact the collection agency and either negotiate a reduced lump-sum payment or arrange a payment plan to satisfy the debt. You’ll want to review your budget and commit to a monthly payment amount you can afford.
3. Know your rights. According to the Fair Debt Collection Practices Act (FDCPA), debt collectors cannot repeatedly make contact with the intent to harass or abuse you. They’re also prohibited from using deceptive practices to collect debts. You can report issues to your state attorney general’s office, the Federal Trade Commission or the Consumer Financial Protection Bureau.⁶

How to prevent medical debt from building up

Medical bills are sometimes unavoidable, but it may be possible to prepare your finances and keep your accounts in good standing. Here are some simple action items:

• Review your insurance coverage beforehand. Will your upcoming costs be covered? Even if it is, you may still be responsible for covering a deductible or copay.
• Ask for cost estimates before procedures. Doing so can prevent unwanted surprises after the fact. If it’s an elective procedure, you might decide to postpone it until you have cash on hand to cover it.
• Request itemized bills immediately. Always review your medical bills for errors. A single mistake could add up to a significant expense.

Conclusion

Having an emergency fund can prevent a surprise medical bill from derailing your budget. Even small contributions to your savings account can add up over time. If you do end up needing medical debt relief, you may be able to negotiate with your medical provider, set up a payment plan or look into financial assistance or a debt forgiveness program. What matters most is being proactive and taking steps to protect your credit.

No matter where you are on the journey, you can start building a positive credit history with Kikoff.