Can debt forgiveness erase medical debt?

CBS News

09-05-2025

We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms.
It can be tough to balance your medical bills with your regular expenses, especially in today's economic landscape.
Getty Images
It's no secret that medical bills can pile up fast, especially in the current healthcare landscape, where even a short emergency room visit or a necessary procedure can easily cost thousands of dollars. According to the Consumer Financial Protection Bureau (CFPB), about $88 billion worth of outstanding medical bills are currently in collections, with this type of debt impacting one in five Americans. But over the past few years, new rules were introduced to ease that burden, like requiring credit agencies to remove paid medical collections and delay reporting on new ones.
That progress may be short-lived, however. This week, the CFPB and industry groups began pushing a federal judge to overturn the medical debt reporting ban, stating that the rule exceeds the CFPB's authority. If that happens, paid or small-dollar medical debt could once again show up on credit reports, reopening the door for financial harm tied to old or settled medical bills. This move serves as a reminder that while medical debt reform efforts are ongoing, nothing is guaranteed, and many Americans are still stuck with hefty balances and only a few clear solutions.
If you're one of the millions grappling with medical bills you can't afford to pay, you may be wondering whether debt forgiveness could be the answer. But can your medical debt be wiped out? Or are there other strategies that make more sense right now?
Learn how to start the debt forgiveness process now.
Can debt forgiveness erase medical debt?
In certain cases, yes, debt forgiveness can erase medical debt, just like it can help cut down on credit card debt or other types of unsecured debt. But whether or not it will depends on the situation and the method of forgiveness you pursue. There isn't a single government-backed medical debt forgiveness program, after all, but there are multiple pathways that can lead to a portion of your medical debt being forgiven.
If your medical debt is due to an ER visit or a stint in the hospital, one possible way to have a portion of your debt forgiven is through a hospital-based forgiveness program. Many nonprofit hospitals are legally required to offer financial assistance to patients who meet certain income thresholds. So, if you're struggling financially, it's worth reaching out to the hospital's billing department to ask about financial assistance programs, even if your bills are already overdue or in collections. In some cases, the hospital may reduce or completely forgive your debt.
There's also the option to pursue debt settlement, either on your own or with help from a debt relief company working on your behalf. In this case, you or the expert you're working with will try to negotiate with the collection agency or medical provider to settle the balance for less than what's owed. If they agree and you pay the negotiated amount, typically via a lump-sum payment, the rest is forgiven. Note, though, that this approach can have tax implications if the forgiven amount is large enough to be considered income by the Internal Revenue Service (IRS).
If you qualify for nonprofit medical debt forgiveness, it could result in having some of your debt forgiven as well. This less common option involves nonprofit organizations, which purchase portfolios of unpaid medical debt from hospitals or collectors for pennies on the dollar and then forgive them. If your debt is included in one of these portfolios, you could receive a letter in the mail one day letting you know your balance has been wiped clean. The catch? You can't apply to be chosen; it's based on internal criteria and availability.
Chat with an expert about your debt relief options now.
What other options do I have for getting rid of medical debt?
If you don't qualify for forgiveness or just haven't had any luck getting it, don't worry. There are still several effective strategies for tackling medical debt without letting it ruin your finances.
Negotiate your bill before it goes to collections. Hospitals and medical providers often have wiggle room on pricing, especially if you're uninsured or underinsured. So, before you commit to paying the full amount, contact the billing department to ask about discounts or payment plans.
Set up a zero- or low-interest payment plan. Most medical providers prefer getting paid over sending bills to collections, so they may work with you to establish a monthly payment plan that fits your budget. As long as you stick to the plan, you can avoid collections and further damage to your credit.
Consider working with a debt relief expert. If your medical debt is mixed in with credit card balances or other types of unsecured debt, it might make sense to work with a debt relief company. They can negotiate settlements or help you enroll in a debt management plan that consolidates your payments.
Look into bankruptcy, but only as a last resort. Medical debt is dischargeable through bankruptcy, but this route comes with serious long-term consequences for your credit and finances. If your debt is overwhelmingly high and other solutions haven't worked, bankruptcy may be worth considering, but only after speaking with a qualified attorney or financial advisor.
The bottom line
Medical debt can be frustrating, but there are real solutions to consider, and some of them could involve having a portion of that debt forgiven. So if you're struggling with medical debt, reach out to your healthcare providers, explore assistance programs and consider consulting with a debt relief expert about your options. The path forward may involve a combination of strategies, but taking action now can prevent further financial damage while you search for relief.