Ultimate Guide to Consolidating Medical Bills

Jason SteeleUpdated February 20, 2025

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

If you have medical bills, you may be struggling with how you’re going to pay them. Trying to keep up with multiple bills from different providers can be very stressful. Consolidating all your medical debt into one loan may be an option to explore.However, there are pros and cons to consolidating medical debt, and you’ll want to consider them carefully before making a decision. Read on to learn about medical debt consolidation.

What Is Medical Debt Consolidation?

Medical debt consolidation is a type of debt consolidation that is specifically for medical bills. Debt consolidation is when you take multiple loans and refinance them into one new loan with a new lender. If you are consolidating medical debt, you will obtain a new loan for the total amount of medical debt you owe. You will then make one payment to one lender instead of several payments to different providers.

How Does Medical Debt Consolidation Work?

Medical debt consolidation involves taking out a new loan or line of credit to pay off your existing debt. That new loan or line of credit pays off the existing debt, and then you pay it off in one installment each month over time. When consolidating debt, you typically want a new loan to have a lower interest rate than your existing debts have. However, many types of medical debt don’t accrue interest at all or they have low interest rates. If that’s the case, you should compare the average personal loan interest rate with your existing interest rates to see if consolidating medical debt makes sense for you. If you paid a medical bill with a credit card or loan, however, you may have interest on your medical debt. In that case, it might save you money to consolidate your medical bills. Consolidation may also simplify your payments, which could be helpful to you.

Average Medical Bill Debt in 2024

If you have medical debt, you are not alone. Approximately 14 million Americans owe at least $1,000 in medical debt, according to a recent report by the Kaiser Family Foundation. Of that group, 3 million people owe more than $10,000.Recommended: What Is a Medical Loan and How Does It Work?

Consolidating Your Medical Bills

If you have medical debt, you should first seek assistance through your medical provider and insurer. However, if they are unable to help, you may want to consider consolidating your medical bills. To consolidate your medical bills, you can look into options including balance transfer credit cards, personal loans, or secured loans or lines of credit. Banks, credit unions, online lenders, and nonprofit credit counseling agencies could be some good options for medical debt consolidation.

Benefits of Medical Bill Consolidation

Consolidating your medical bills could simplify your monthly payments so that you make one payment to one lender instead of multiple payments to multiple providers. Consolidating medical bills might be beneficial for your credit if you are better able to make the payments on your debt.

Risks of Medical Bill Consolidation

It’s important to understand that medical bills receive certain credit protections, including a six-month grace period before medical debt is reported to the credit bureaus. Consolidating medical bills means that they will no longer receive these protections. Before deciding whether to consolidate medical bills, it is important to weigh the risks and benefits of medical bill consolidation.

Benefits to Medical Bill Consolidation	Risks to Medical Bill Consolidation
Debt consolidation may simplify your payments	Your account may no longer be classified as a medical bill account and therefore may not receive credit protections
Debt consolidation might be beneficial for credit	A late payment, default, or collection account could show up on your credit reports and hurt your credit

Medical Bill Consolidation Affect on Your Credit

As mentioned, if you’re on a payment plan from your healthcare provider for your medical bill, that debt may not be reported on your credit report. The major consumer credit bureaus do not include medical collection accounts on your credit reports until the account is at least 180 days past due. However, if you don't pay your medical bills, then the account can be sent or sold to a collection agency, and that agency could report your unpaid debt to the credit bureaus. In this case, your medical debt would show up on your credit report, and it could stay on your credit report for up to seven years from when your account first went past due. If your insurance company pays the bill, the credit bureau will remove the medical collection accounts from your credit reports.Even if medical collection accounts do show up on your credit, it’s possible they may have a lesser effect on certain credit scores than other types of collections accounts. Some credit-scoring models will even ignore paid medical collections entirely when determining your credit score.Recommended: The Average Cost of MRIs With and Without Insurance

Options for Consolidating Medical Bills

There are a few options for consolidating your medical bills. These include balance transfer credit cards, personal loans, and home equity loans or lines of credit.

Balance Transfer Credit Cards

Balance transfer credit cards can be an option for consolidating medical bills if you originally paid your medical bills with a credit card. Most credit cards charge a balance transfer fee, but it might still be worth the cost if you would be saving money overall. Balance transfer credit cards offer introductory periods with no interest on balances transferred from other credit cards. During the introductory period, you could make progress on paying off existing debt without having to worry about accruing additional interest.

Personal Loans

A personal loan is a type of loan that can be used for a variety of purposes, including consolidating other existing debts. With a personal loan, you borrow money from a bank, credit union, or online lender and pay it back monthly over time with interest. If you are thinking about using a personal loan as a loan to consolidate your debt, you should compare the interest rate of the personal loan with the interest rate of your existing medical debt. You should also consider the pros and cons to personal loans. Personal loans can offer flexibility and ease of consolidating debt, but they can come with additional fees and penalties.

Home Equity Loan or Line of Credit

A home equity loan or home equity line of credit (HELOC), in which you borrow against the equity you have in your home, can also be options for medical debt consolidation. Because your home is the collateral, these loans may offer lower interest rates and higher loan amounts than unsecured personal loans. However, if you fail to repay the loan, you risk losing your home. Recommended: Home Equity Loans vs Personal Loans

Alternatives to Consolidating Your Medical Bills

If you didn't originally pay your medical bills with a credit card or a loan, consolidating medical bills may not be the best option for you. Medical bills often have low interest rates and providers may even help you find manageable payment plans. If you consolidate your bills, you may end up with higher interest rates or higher monthly payments. If you can’t afford to pay your medical bills, there are other options you could turn to, like negotiation, credit counseling, or bankruptcy.

Negotiate With Creditors

Your creditors may work with you to negotiate a different repayment plan or lower your outstanding balance. If you are looking at settling a small amount of debt, negotiation might be an option to consider. In addition, there are nonprofits that offer free medical bill advocating services.

Credit Counseling

Nonprofit credit counseling agencies can offer debt management plans. Debt management plans function like debt consolidation, where you make one monthly payment to the agency, and the agency then pays your creditors directly. The agency may even be able to negotiate fee waivers and lower interest rates on your behalf.

Bankruptcy

If you have looked at all other options and none of them work for you, you could explore filing for medical bankruptcy. Deciding whether to move forward with settling debt or bankruptcy will depend on your amount of debt, credit, and other factors. Filing for bankruptcy won’t help cover future expenses, so it is best used for past bills you know you will not be able to pay off. However, bankruptcy can have a serious and long-lasting effect on your credit, which can affect your ability to buy a home, rent an apartment, or buy a car for up to 10 years. So, consider this option carefully.

Determining if Medical Debt Consolidation Is Right for You

When determining whether medical debt consolidation is right for you, you should consider your circumstances carefully. Look at the amount and type of medical debt you have, the terms and conditions, the interest rates, and special protections that may be in place that you could risk losing if you consolidate your debt. Consider all factors to make sure that consolidating medical debt makes sense for you.

The Takeaway

Choosing whether to consolidate medical debt is a big decision, and you should thoroughly weigh all your options to see if it could help you. If you do decide to consolidate your medical debt, Lantern by SoFi can help make the process easier. You can compare personal loan offers from multiple lenders in our marketplace to find the best rate and terms for you. Compare personal loans for debt consolidation with Lantern.

Frequently Asked Questions

What are the benefits of consolidating medical bills?

What happens when you consolidate medical bills?

What options are available for consolidating medical bills?

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About the Author

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.

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