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How to handle medical debt

Step-by-step guide to tackle your bills, plus 4 tips for negotiating with creditors.

Is medical debt weighing down your life — and your credit score? If you’re ready to conquer your debt and straighten out your finances, start by creating a plan that helps you understand the full scope. Then you can take steps to dismantle it one bill at a time.

What should I do when I’m facing medical debt?

Medical debt can be overwhelming, especially when you’re trying to tackle other types of debt as well. Rather than ignoring it, here’s a step-by-step guide to confronting medical debt head on:

Doctor talking to a patient about a medical treatment

Step 1. Gather your outstanding bills

This can be one of the most difficult parts. Find every bill from each of your providers and put them all in one place. Next, check which ones are actual bills sent by a provider and which are claims information or explanations of benefits (EOBs) sent by your insurance company. Separate them, and move on to Step 2.

Step 2. Make sure your bills are accurate

Medical bills aren’t always accurate. Sometimes a provider enters the wrong code or a claim is filed incorrectly, putting you on the hook for a procedure you didn’t have or money you don’t owe. Go over your bills and EOBs with a fine-toothed comb, and reach out to your doctor’s office or insurance company to clear up any mistakes.

Step 3. Check how insurance has been applied

In addition to checking for accuracy, check what procedures your insurance covered and how your copay was applied. You’ll need to know what your policy covers to make sure everything is accurate, so review it alongside your bills to fully understand the scope of your situation.

Step 4. Put your bills into a spreadsheet

You can enter everything into a spreadsheet — good for those who don’t want to do too much math — or simply stick to pen and paper. Whichever you choose, list all of your bills from oldest to newest, noting any that have already been sent to collections.

This will help you see how much you owe and to which providers. If you decide to pursue debt consolidation, you’ll know the amount you need without worrying about borrowing too much or too little.

Step 5. Know your rights

Once your medical debt has gone to collections, it’s treated like any other debt. But before it reaches that point, try to discuss a payment plan with your provider. If you receive a payment plan agreement in writing, your medical provider can’t send your bill to collections as long as you’re making repayments on time — even if they’re just $25 or $50 a month.

If it’s too late and your bill has already gone to collections, you still have rights. While collection agencies are under provincial regulation, banks as well as many trust and loan companies are considered federally-regulated financial institutions (FRFI) and must adhere to a number of rules. Among other things, FRFIs may not:

  • Apply excessive or unreasonable pressure on you to repay your debt.
  • Suggest to your friends, family, neighbours or employer that they should repay what you owe unless they’re guarantors or cosigners of your debt.
  • Call you on your cell phone unless you’ve provided this number as a way to contact you.
  • Use threatening, intimidating or abusive language
  • Contact you on holidays
  • Reach out to your friends, family, neighbours or employer to get any information other than your phone number and address unless:
    • You’ve consented to this
    • These people are cosigners/guarantors of your debt
    • Your employer is being contacted to confirm your employment.
  • Contact you outside of the following hours:
    • Monday through Saturday, 7am-9pm
    • Sunday, 1-5pm
Be sure to check out federal and provincial rules regarding debt collection to learn what is and isn’t allowed during the process. Contact the Financial Consumer Agency of Canada to report FRFI violations of these rules. Alternatively, contact your provincial office of consumer affairs to report violations of provincially-regulated institutions.

What is the statute of limitations on medical debt?

A statute of limitations (SOL) is the period where legal action can be pursued. For medical debt, this is the time frame in which a medical company or collection agency can sue you for money you owe on an outstanding bill. The SOL begins on the date of your last payment or the date on which a company can prove that you last acknowledged your debt.

The time limit for debt collection varies among provinces and territories, with most jurisdictions opting for a limit of either 2 or 6 years. The SOL for court orders is different and could potentially go up to 10 years with the option to renew for another 10 years. Consult an attorney to discuss the laws that apply to your specific situation.

Watch out for medical collection scams

Not all debt collection is aboveboard, which is why knowing your rights is critical. Medical debt collections fall under the same scope as all other collections. This means a medical debt collector can’t call you outside of normal hours, use abusive or threatening language or physically force you to pay up.

There are also a few scams you should be aware of:

  1. You don’t recognize the account.

    If a collection agency contacts you about a procedure or doctor’s visit you don’t have any record of, it might be a scam. Request proof of the bill and check it against your own records. Even if it’s legit, the debt may not be collectible if the time set by the Statue of Limitations has elapsed.

  2. You can’t find any information on the collection agency.

    It’s not uncommon for medical offices to sell debt to a collection agency, but if you can’t find any solid details on the one contacting you, it could be a scam. It’s best to call your provider and ask which company was entrusted with handling your bills, so you can confirm the debt collector is legit.

  3. You’re pushed to pay as soon as possible.

    Scam collection agencies typically want you to pay quickly — usually with threats of jail time or lawsuits. Take note of this and the name of the collection agency, and cease contact until you’re sure the collectors you’re dealing with are the real deal.

  4. You’re asked to pay via wire transfer.

    Legitimate debt collection agencies usually only accept payment via cheque, debit card or credit card — methods that can be easily traced. If you’re asked to pay through cash or wire transfer, you may be dealing with a scam collector. Make sure you’re aware of common money transfer scams and what to do about them to avoid being defrauded.

Step 6. Create a plan to tackle your medical debt

Once you’ve made sure your debts are accurate, your insurance has been applied correctly and the debt collection agency is legit, it’s time to make a plan. Use the spreadsheet you made and consider a method to eliminate your medical debt. As you go, mark dates paid and the names of anyone who provided assistance. Keep plenty of records, and reach out to the billing agency or collection company if you notice your payments don’t go through.

Woman working though her finances to save moneyOptions for tackling medical debt

When you’re ready to put your plan into action, there are a few ways to start dealing with your medical debt:

  • Negotiate what you can. Prices on medical services aren’t necessarily fixed. If you’re able, contact your provider’s billing department and see if they’re willing to put you on a payment plan or lower your total bill. And if you aren’t comfortable negotiating, you could find a company to do it for you.
  • Ask for a financial hardship plan. Some hospitals and doctor’s offices are willing to set up a payment plan based on financial hardship. If you’ve been struggling with your budget and aren’t able to make repayments, reach out and discuss your options.
  • Compare medical loans. Medical loans are one of the most useful tools for handling medical debt. You can use one to refinance debt you already have, which may lower your interest rate or make your monthly payments more affordable.
  • Apply for a balance transfer credit card. A balance transfer credit card works similarly to a medical loan. You can use yours to consolidate multiple monthly payments into one.
  • Find nonprofit assistance. Check out charities and nonprofits dedicated to helping families in need. Many organizations are devoted to supporting those with specific conditions or who fall within a specific demographic. Through these, you may be able to get access to services and equipment that are partially or fully funded.
  • Look into bankruptcy or debt settlement services. Although it can help you deal with your medical debt, bankruptcy should be a last resort. Debt settlement, on the other hand, can sometimes have less of an impact on your credit score and may restore your financial health sooner, but it comes with risks. Companies offering this service may not have your best interest in mind the way that bankruptcy lawyers will. And some creditors may not be willing to accept a debt settlement plan. In the end, both of these options hurt your credit and your ability to get loans for years to come, so you should speak with a financial advisor before committing to either option.

Compare providers to consolidate your medical debt

1 - 8 of 8
Name Product Ratings APR Range Loan Amount Loan Term Broker Compliance Requirements
Spring Financial Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
10.8% - 46.99%
$500 - $35,000
6 - 60 months
Requirements: min. income $1,800/month, 3+ months employed, min. credit score 500
Loans Canada Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
6.99% - 46.96%
$300 - $50,000
3 - 60 months
Loans Canada is a loan search platform with access to multiple lenders. Applicants will be matched with a suitable lender based on credit history and borrowing requirements.
Requirements: min. credit score 300
LoanConnect Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
8.99% - 46.96%
$500 - $50,000
3 - 120 months
LoanConnect is a loan search platform with access to multiple lenders. Applicants will be matched with a suitable lender based on credit history and borrowing requirements.
Requirements: min. credit score 300
easyfinancial Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
9.99% - 46.96%
$500 - $100,000
9 - 120 months
Requirements: min. income $1,200/month
AimFinance Personal Loan
Finder Score:
★★★★★
46.00%
$1,000 - $5,000
9 - 24 months
Requirements: min. credit score 580
Mogo Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
9.90% - 46.96%
$500 - $35,000
6 - 60 months
Requirements: min. income $35,000/year, min. credit score 600
SkyCap Financial Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
12.99% - 39.99%
$500 - $10,000
9 - 36 months
Requirements: min. income $1,666.67/month, full time employment/pension, min. credit score 575, no bankruptcy
goPeer Personal Loan
Finder Score:
★★★★★
8.99% - 34.99%
$1,000 - $35,000
36 - 60 months
Requirements: recommended income $35,000/year, no payday loan debt, min. credit score 600, min. 5-year credit history. (Avg. approved rate of 15.80%)
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4 tips for negotiating medical debt

Ready to talk to your medical provider or creditor? Here are some top tips for negotiating:

  1. Look for extra ways to reduce the amount you owe. Medical debt often comes with more than just the cost of a procedure. Look line by line for added fees that you could get waived.
  2. Ask for a discount. If you don’t owe a large amount, see if your provider will give you a discount for paying a lump sum. You’ll have an agreed-upon amount of time to pay it off, and it may also help to reduce the total amount you owe.
  3. Request a payment plan. For those who owe more, a payment plan is generally a good idea. Many providers are willing to work with you to create a plan that fits your budget. State your limitations outright and try to come to a compromise that gets your bills paid without emptying your bank account.
  4. Hire a medical billing advocate. A medical billing advocate or patient advocate is a professional who can help you with the negotiation process. It may be a costlier option up front, but they’ll know all the laws and actual costs of procedures to help you get a good deal.

How does medical debt affect my credit score?

If you have unpaid medical debt that’s been sent to collections, it can drastically harm your credit score. But until it reaches collections, it won’t have much of an impact at all. In fact, many medical providers may not actually move your bills into collections until months after payments stop coming in.

Can medical debt be inherited?

In short, no. Under Canadian law, your debts will not pass to your family or beneficiaries upon your death. However, a medical debt will pass on to anyone who cosigned for it or guaranteed it. A survivor could also inherit your financial obligations if the two of you received a joint medical benefit or treatment, and the terms and conditions of the arrangement made both of you liable for the cost.

This is why it’s important to carefully review the terms of any financial agreement you enter into, looking particularly for any language that indicates joint responsibility. You’ll want to make sure that anyone else connected with the agreement won’t be surprised by an unexpected financial obligation in the event of your death. An estate lawyer or loan advisor may be able to help you with this.

Must read: Am I responsible for my spouse’s medical debt?

No. In Canada, debts are not inherited by family members, including spouses. So, if your spouse passes away, collections cannot pursue you to pay off his or her medical debts. The only exceptions would be if you cosigned, or acted as the guarantor of, your spouse’s debt or were in some way made liable by the terms and conditions of an agreement you both entered into.

The exact wording of such agreements will determine your responsibility. The easiest way to find out what your obligations are is to consult with an estate lawyer and discuss your specific situation.

Bottom line

The first step to conquering medical debt is organizing your bills and figuring out exactly how much you owe. From there, you can start negotiating with your creditors, look into nonprofit assistance programs or refinance your debt with a lower interest rate or better terms.

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