Medical debt refers to money owed to doctors or other medical providers as the result of services rendered. Even when people possess insurance, they can still accrue quite a bit of medical debt. When customers must pay percentages of things like hospital care, they can leave hospitals owing a lot of money. People who lack insurance, especially those living in non-socialized medicine countries, can be in even worse condition after a hospitalization, and quickly owe tens of thousands of dollars in debt for a few days of care.

In the US, half of all personal bankruptcies are the result of medical debt. Amounts can be so overwhelming that it would seem impossible to ever pay them. Sometimes bankruptcy is the best solution to getting rid of this debt, but it does come at a cost. Those who go bankrupt take a serious hit on their credit rating, which may significantly affect ability to get credit in the future, obtain jobs, or even rent an apartment or house.

The trouble is many people view medical debt as almost as bad as bankruptcy when it comes to evaluating credit score. Even when people make regular payments to pay off medical debt and are not delinquent on these payments, amount of the debt may disqualify people from getting loans or renting apartments. It is a difficult situation for a number of people.

There are some ways to potentially reduce this debt. Having insurance can help, but some people have a medical crisis that results in them losing insurance while they’re still receiving extensive medical care. However, people may reduce risk for high amounts of medical debt when they carry insurance.

Sometimes hospitals and other medical providers are open to renegotiating amounts owed. The uninsured tend to pay more for the same services than do people with insurance. Medical providers may have the discretion to reduce amount of money owed.

Trying to reduce medical debt before it is incurred is a better option. When people know in advance that they require medical services, they may be able to use hospitals or other medical providers with sliding scale fees or with greater power to negotiate savings. Once the debt is already in place, facilities are not under any obligation to reduce it. Hospitals may still be open to negotiations if they can get reasonable assurance from a customer that the debt will be paid. When a person does enter bankruptcy, this can represent huge losses for those facilities or medical providers, so they may be amenable to reducing some costs.

Another thing people should know about most of this debt is that they will tend not to incur late fees if they set up and keep to a regular repayment schedule. Especially hospitals are likely to take whatever a patient can afford, even if this means the debt remains for many years. When people are making regular payments, accounts are unlikely to go into collections, especially if the medical facility understands the patient’s desire to pay, but inability to pay off the debt quickly. Some hospitals participate in programs that may reduce or even forgive medical debt if the patient falls within certain financial guidelines.

However, some medical facilities may initiate collections against a person with medical debt, especially if they possess significant assets. People have lost property due to debt when accounts do go into collection. This is why many people ultimately opt for bankruptcy, especially if they only own a primary residence. Retaining that residence is usually easier through bankruptcy and stops collection of the debt.