Creating a Debt Settlement Plan for Medical Debt

When you have medical debt, using a debt settlement plan is one way to eliminate the problem. Creating a debt settlement plan is something that can be done on your own with a little bit of work. Here are the basics of how to create a debt settlement plan for your medical bills. 

Evaluate Your Debt

When you need to create an effective debt settlement plan, you first need to get a clear, complete view of your financial situation. Get all of your medical bills in one place and total everything up. Many times, people over- or underestimate exactly how much medical debt they have. When you sit down and add it all up, the total amount owed may be considerably different from what you imagined. 

Set a Budget

Once you have properly evaluated your debt situation, you can determine what your monthly budget should be for your debt payments. This step will require looking at your total debt as well as how much money you have coming in. You will also have to bear in mind what you will be paying on your other monthly bills. Once you see how much is left over after other bills are paid, you can determine how much you should be paying to settle the debt. If you are planning on paying everything off with a lump sum, you need to determine the maximum amount that you can pay. Do not overestimate how much you can pay and end up cutting yourself short for other things. You still have to eat and make your housing payment before you pay the medical bills off. 

Set Up a Plan

After you have thoroughly reviewed your debt and potential payments, you need to contact the creditors that hold your medical accounts. Discuss your options for repayment and settlement. Depending on how delinquent the debt is, they may be willing to settle the debt for significantly less than you owe. If that is the case, make sure that the settlement amount they offer is no more than--and is, preferably, less than--the amount that you agreed you could pay for a lump sum payment. If it is, make the payment and settle the accounts. You will then be able to move on and focus on other things. 

If the creditor does not want to settle in one lump sum, they may require you to make monthly payments to eliminate the debt. In this case, set up the payment so that it is equal to or less than you decided you could afford each month. Then set up the payment so that it is automatic. They may have an automatic drafting program, or you could set it up through your bank. 

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