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CBS News
7 hours ago
- Business
- CBS News
Can debt relief help with unpaid medical bills? What experts say
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. There are multiple debt relief (and DIY) options that can help you tackle your unpaid medical bills. Getty Images Despite recent efforts toward medical debt reform, many Americans still deal with piles of medical bills. A 2024 analysis from Peterson-KFF shows that about 20 million adults — nearly one in 12 — have unpaid medical debt. Around 14 million of those owe at least $1,000, while 3 million owe $10,000 or more. "Most people don't worry about medical bills — until they do," says James Lambridis, CEO of debt relief platform DebtMD. "Medical bills usually come without warning, and they're often much more expensive than expected." Compound these balances with other challenging factors like stubborn inflation, high interest rates, and economic policy concerns, and consumers are feeling the pressure to get out from under their medical debts. For some, debt relief strategies may be able to help. Are you one of the millions of Americans looking to tackle medical debt? We asked some experts about your debt relief options. Start tackling your medical debt here now. Can debt relief help with unpaid medical bills? If you're dealing with medical debt, there are several debt relief options you might explore. These include: Credit counseling The first option you might consider is credit counseling. Credit counselors can help you "Create a budget, prioritize payments, and can potentially assist with other high-interest debt to make the medical debt more affordable," says Thomas Nitzsche, a financial educator and vice president of public relations at Money Management International, a nonprofit credit counseling agency. According to Nitzsche, about one in five of the company's customers come to them with medical debts. "Credit counseling is highly recommended, especially when debt feels overwhelming," says Tayri Martinez-Orza, financial wellness expert and quality assurance expert at GreenPath Financial Wellness, a nonprofit financial counseling service. "It provides a fresh perspective and support by reviewing all of their debts — as well as their income and expenses — to help identify the most affordable and realistic repayment plan." Best of all? It's typically free. "A counselor gives you an in-depth debt analysis over the phone," says Howard Dvorkin, chairman of "There's no obligation, and you hang up knowing all your options and — most importantly — creating an accurate monthly budget." Learn more about your credit counseling options here. Debt settlement Settlement may also be an option. This is when your debt relief company negotiates with your creditor (in this case, usually the hospital or doctor) to settle your debt for less than what you owe. You'll still need to make a payment, but it can often be significantly less than what you owe. Settlement is more likely to be successful if you owe a large amount and can prove you have a financial hardship. In this case, it would benefit the creditor more to get some money from your account rather than none at all. "Debt settlement is a viable option for individuals with unsecured debt exceeding $7,500, — including medical debt or medical debt placed on a credit card," says Natalia Brown, chief compliance officer at National Debt Relief. Debt Management Plan (DMP) Debt management plans could be an option, too, especially if medical debts aren't the only debts you're dealing with. With a DMP, your debt relief provider handles repayment of all your debts on your behalf. You only make one flat payment to them each month, and they focus on putting those funds toward paying down your debts most efficiently. Explore other strategies Beyond debt relief, other strategies can help you tackle medical debt, too, experts say. First, you can negotiate. "Your best option is to simply ask to pay less," Dvorkin says. "It sounds silly, but sometimes you shave dollars off your bill just by calling your healthcare provider and calmly explaining you can't afford to pay everything you owe right now. Sometimes, they'll ask what you can afford, so have a number in mind." You can also ask about hardship options, financial assistance, or in-house payment plans, which could reduce your costs or help you spread them out over a longer period of time. "Many hospitals offer financial assistance to help people burdened with medical care," Lambridis says. "Check to see if you meet their requirements to qualify. Even if you don't, your hospital may be able to put you on a more convenient payment plan." Finally, always double-check your bills. Medical coding errors are common, and depending on your insurance coverage, they could cost you quite a bit. "After receiving your bill, check to see if it's accurate," Lambridis says. "Look for overcharges, duplicate billing, or charges on services that you didn't receive. Medical bills can be difficult to understand. If you find yourself confused, contact your hospital's billing office." You can also speak to a medical billing advocate. They can help you decipher medical bills and ensure your charges match the services you actually received — and that your insurance was correctly applied to those charges. Don't use credit cards or loans (and don't wait) Whatever you do, try to avoid using credit cards or loans to pay off medical debt. Thanks to recent credit reporting changes, failing to repay medical bills should not have an adverse effect on your credit — but not paying credit cards or loans will. Additionally, medical providers are typically slower to send debts to collections, as it takes a while for billing and insurance payments to be sorted out. This could give you more time to pay off your bills, especially with a payment plan. Finally, credit cards and loans can come with high rates. The current average rate on a credit card is over 21%. "Placing medical debt on credit cards can be less effective, especially in a high-interest environment," Brown says. "Doing this often leads to even more expensive balances since interest can accrue on credit cards if the full balance isn't paid monthly."
Yahoo
3 days ago
- Business
- Yahoo
How do debt relief programs work?
Debt relief typically takes one of three forms: debt settlement, consolidation and management. Working with a debt relief company can result in less debt or a faster payoff — but there are often hefty fees, often up to 25 percent of the debt enrolled, attached to the services. Working with a debt relief company also often results in credit damage due to stopping payments during negotiations. Not every debt relief company is legit, so be prepared to research any company you consider. If you're struggling to pay off your debt and at risk of defaulting, a debt relief company may be able to provide assistance. Debt relief can come in a few forms, including self-driven ones, but a credit counselor or debt relief company can help you tackle the process. However, you'll pay a fee for a debt relief company's services. Debt relief companies are for-profit institutions that help you manage and pay down your debts. Depending on the company and what services are offered, they may work with creditors to help you get out of debt for less than what you originally owed. Most debt relief companies charge a hefty percentage of your discharged debt as a fee for their services. Each company offers different services. Some of the most common debt relief options include debt consolidation, debt settlement, credit counseling and debt management. Debt relief companies exist to help consumers lower their debt or better manage their repayments — for a fee. Most relief companies require an initial consultation to determine eligibility and to decide which method is best for you. However, it's important to walk into the process prepared by knowing all your options. Often, companies ask you to stop paying your debts to give them leverage to negotiate with your creditors and get parts of your debts settled. Then, they help you build a plan to repay your remaining balance. It is illegal to charge an upfront fee for debt settlement services. These fees should only be charged once your debts have been settled or resolved. More than that, if any business guarantees it can settle your debt, take your business elsewhere. This is a sign that the organization may be a debt relief scam. Or, you may instead opt to get a debt relief company's advice on how to manage your debts to avoid missing payments and pay them off faster. However, it's recommended you seek a nonprofit credit counselor for that kind of service. They typically charge lower rates and will not try to sell you additional services. Debt relief programs and debt consolidation Some debt relief programs will have the option to consolidate your debt. Debt consolidation can save you hundreds or even thousands of dollars in interest. Working with a debt relief program is just one way to explore your debt consolidation options. You can also explore self-driven options. Certification, fees and repayment time are the three main factors to prioritize when comparing debt relief companies. Certification: Any debt relief company should be backed by the National Foundation for Credit Counseling and the Financial Counseling Association of America. If the company lacks these certifications, you'll want to take your business elsewhere. Fees charged: Most debt relief companies will charge a fee between 15 percent and 25 percent of the total debt enrolled for settlement. Companies may also charge fees for opening and managing the savings account required to make payments. Repayment timeline: It typically takes between two and four years to complete a debt settlement program. This is based on the total amount of debt and creditors you have. Check the website to make sure the predicted timeline matches your needs. While debt relief can provide a path to taking control of your finances, there are also drawbacks to consider when taking this step, including: Impact on your credit score: The debt relief process may require that you stop paying your creditors for a period of time to better negotiate with creditors. During this time, your credit score will take a hit for lack of payment. Fees: Some debt relief companies charge fees, but these fees should only be charged once your case is settled. Look for a nonprofit counselor to potentially avoid these. Scams: There are scam companies working in the debt relief industry that may charge you money without actually helping to resolve your debt. Increased debt: While you stop paying your bills during the negotiation process, your credit cards or other debts could incur late fees and end up increasing your debt. In addition, any settlement fees will be added to the overall amount you owe. There also may be tax ramifications associated with forgiven debts. If you owe $10,000 on a credit card and that debt is reduced during settlement to $5,000, then the IRS may consider the forgiven $5,000 taxable income. Debt relief may be a good option for those facing potential default or bankruptcy. Just make sure you vet the company carefully to weed out the red flags, like upfront fees or settlement guarantees. And remember that some debt relief company services come with inherent risks to your credit score. If you ask the company to negotiate a debt settlement, you'll take a credit score hit when you stop taking payments — whether the creditor agrees to work with the relief company. Do debt relief companies charge fees? Yes. Debt relief companies charge fees in exchange for their services. The amount you're charged depends on the company you work with and the relief method you choose. Keep in mind that legitimate companies should never ask you to pay fees upfront — if you're asked to provide this, it's likely a scam. How long will debt relief affect your credit score? Working with a relief company will typically result in an immediate negative impact on your credit score. The degree to which your score drops depends on the relief method you choose and whether your creditors decide to report it. Is debt relief good or bad? In most situations, debt relief isn't something that will be immediately good for your finances. For one, it's often a costly undertaking due to the fees charged by the companies. It also has negative impacts on your credit score. Even as you rebuild your credit score, the forgiven debt will linger up to seven years on your report. But in some situations, it may be the only way to avoid bankruptcy. When considering whether to pursue debt settlement, you should also look into credit counseling from a nonprofit agency. How do I qualify for debt relief? Consumers who have a qualifying type and amount of delinquent debt can generally qualify for debt relief. However, each company has different approval and minimum debt criteria.
Finextra
03-06-2025
- Business
- Finextra
Financial Plus Credit Union partners Credit Mountain on lain approval process
Financial Plus Credit Union is proud to announce a new partnership with Credit Mountain, a Credit Union Service Organization-built platform that empowers borrowers through personalized financial education, digital credit counseling, and real-time progress tracking. 0 This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author. Through this partnership, Financial Plus will introduce the Warm Decline—a reimagined and redesigned credit decline process that meets members with empathy and offers a clear path to loan eligibility. Applicants will have access to a digital experience where they can choose financial goals, follow a personalized action plan, and access tools and education to improve their financial health. 'We understand that applying for a loan and taking a new financial step can feel intimidating,' said Andrea Coggins, Vice President of Lending at Financial Plus Credit Union. 'That's why it's important tomeet consumers where they are—not just saying 'no' when they hit a roadblock, but instead saying, 'not yet,' and then walking alongside them with the tools, knowledge, and resources to help them reach their highest potential.' 'We're proud to partner with Financial Plus to turn declines into opportunities,' said Aaron Kelemen, Client Success Leader at Credit Mountain. 'Together, we're making lending more human—offering real solutions and support when members need it most.' In addition to the member-facing experience, Credit Mountain will also bring greater efficiency to the lending process by automating adverse action notices and reducing operational overhead.
CBS News
20-05-2025
- Business
- CBS News
How can credit counseling help with my credit card debt?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Credit counseling can help improve your financial health — and there are a few specific ways it helps with your credit card debt, in particular. Getty Images There's a specific kind of stress that comes with credit card debt: the kind that creeps in at the checkout counter and then shows up in your mail or inbox when the credit card bills roll in. You tell yourself you'll catch up next month, but somehow, your credit card balance keeps growing. And, in most cases, it's not that you're careless. It's that life is expensive, especially in the midst of today's high-rate environment and sticky (but cooling) inflation issues. And, in turn, credit cards have become a safety net for many people. But if you've hit that point where your credit card bill juggling act is no longer working, your debt relief options, and credit counseling, in particular, might be worth a closer look. With credit counseling, the goal is to work with someone who can help you map out a plan, cut through the noise and get your finances back on solid ground. And when it comes to high-rate credit card debt, that kind of guidance can make a bigger difference than you might expect. So what does credit counseling actually do, and how can it help with your credit card debt? That's what we'll break down below. Chat with a debt relief expert about the help available to you now. How will credit counseling help with my credit card debt? The credit counseling process typically starts with a free or low-cost one-on-one session with a certified credit counselor. During this meeting, the counselor will go over your financial situation, looking at everything from your income to your expenses to the total amount you owe on your credit cards. The goal is to get a full picture of your finances so they can offer realistic, actionable advice. If you qualify, one of the main tools a credit counselor might recommend is a debt management plan. This is a structured repayment plan where you make one consolidated monthly payment to the credit counseling agency, and they distribute the money to your creditors. In many cases, the agency will negotiate with your credit card companies to reduce your interest rates or waive late fees, making it easier to pay off the debt faster and more affordably. Here's what that could mean for you in practice: You'll have one predictable payment each month instead of juggling multiple bills. Your credit card interest rates may be significantly reduced. Late fees and penalty charges may be waived once you're enrolled in the plan. You'll typically pay off the debt in three to five years That said, credit counseling isn't a shortcut to avoiding repayment. You'll still need to pay back what you owe, but the plan can make it far more manageable. Find out more about your debt relief options now. When is credit counseling the right option? Credit counseling makes the most sense if your credit card debt feels out of control, but you still have enough income to make monthly payments, just not at the inflated rates your cards are charging. You might benefit from credit counseling if: It can also be a helpful alternative to debt consolidation, especially if your credit score has taken a hit and you're not eligible for favorable loan terms. Because debt management plans aren't based on your credit score, you may still qualify even if your credit isn't in great shape. Just keep in mind that debt management plans aren't particularly flexible. Once you sign up, you typically can't use your credit cards anymore, and you'll need to stick to the payment plan every month to stay in good standing. If you miss payments or drop out of the plan early, your creditors could reinstate your original interest rates, and any progress you made could unravel quickly. The bottom line Credit counseling isn't a cure-all, but for the right person, it can be a great way to get back on track. This strategy offers structure, access to lower interest rates and the chance to pay off your credit card debt without taking on new loans or damaging your credit further. And because it's offered through nonprofit organizations, the initial advice is usually free and focused on helping you, not selling you something. If you're feeling buried under your credit card bills and unsure what step to take next, talking to a certified credit counselor could be the first move toward a debt-free future. Even if a debt management plan doesn't end up being the right fit and you need to take more drastic measures, you'll walk away with a clearer picture of your options, and sometimes, that clarity is the biggest relief of all.
CBS News
12-05-2025
- Business
- CBS News
How much does credit counseling cost?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Credit counseling could help you tackle your high-rate debt problems, but there are extra costs to weigh before enrolling. Getty Images If you're feeling overwhelmed by the amount of debt you're dealing with in today's high-rate environment, the last thing you want is to add another expense to the mix. That's why many people hesitate when they hear the term credit counseling. While getting this type of expert debt support certainly sounds helpful, there are fees involved with their services, and it can be tough to justify the extra costs when you're already struggling to make ends meet. But getting help from a credit counselor could be the lifeline you need to get back on track. With credit counseling, you get expert insight into your financial situation, help with building a realistic budget and access to tailored strategies that can help you better manage or pay off your debt. And, while you generally won't get access to these services for free, working with a credit counselor could be more affordable than you think. So, how much can you expect to pay for credit counseling? Below, we'll examine what to know about the cost of this type of debt relief — and how it compares to what your other debt relief options might cost you over time. Compare your debt relief options and start tackling your high-rate debt now. How much does credit counseling cost? The cost of credit counseling depends on a few key factors: the agency you work with, the type of service you need and whether your financial situation requires a one-time consultation or ongoing support. Let's start with the basics. Most nonprofit credit counseling agencies offer free initial consultations. These sessions are typically about 30 to 60 minutes long and include a review of your income, expenses, debts and credit report. You'll walk away with a clearer picture of your financial situation and some guidance on what to do next. If your counselor recommends a debt management plan, which is a structured repayment plan that consolidates your unsecured debts into one monthly payment while lowering your rates and fees, that's when the costs start to kick in. You'll usually be charged: A setup fee : The setup fee : Monthly maintenance fees: These fees can vary based on the agency and other factors but are usually between $25 and $50 per month. The total amount you pay is capped nationwide at $79 per month (but may be less based on state regulations), and nonprofit agencies are required to keep their fees reasonable. So if you sign up for a debt management plan, you could end up paying between $300 to $600 per year in maintenance fees on average. That's an added cost on top of your high-rate debt, but it's still much less than the cost of interest on high-balance credit cards or the fees charged for many other types of debt relief. Get help with your expensive debt today. How does the cost compare to my other debt relief options? Credit counseling is just one of many tools you can use to get out of debt, but it tends to be one of the most cost-effective. Here's how the cost of credit counseling stacks up to the other common debt relief solutions: Debt forgiveness: Debt forgiveness, also known as debt settlement, involves working with a debt relief agency to negotiate with your creditors on a lump-sum settlement that's less than what you owe. That sounds appealing, as it can lower your total balance by 30% to 50% on average, but it comes at a steep price. These companies often charge 15% to 25% of the enrolled debt when negotiations are successful, which can easily amount to hundreds or thousands of dollars. The process can also damage your credit score and lead to tax consequences, as the forgiven debt is considered taxable income. Debt consolidation: Taking out a loan to consolidate your debt can simplify repayment and possibly reduce your interest rate, but there are costs involved. You may have to pay origination fees, and if your credit score isn't great, the interest rate may not be much better than what you're already paying. That, in turn, can drive up the total cost of consolidation. Bankruptcy: Filing for bankruptcy is typically the last option you should consider. While Chapter 7 bankruptcy can discharge certain debts, it also comes with extra costs, like court filing fees (typically a few hundred dollars on average) and attorney fees that can add up to thousands of dollars by the time the case is complete. Bankruptcy also leaves a lasting mark on your credit report for up to 10 years, driving up the cost of borrowing over the long haul. The bottom line Taking advantage of what credit counseling offers can be an affordable and smart way to better manage your debt. While the monthly costs of a debt management plan through a counseling agency generally range from $25 to $75 a month, that's typically a small price to pay for the professional guidance, reduced interest rates and structured plan that you'll get in return. And, unlike more aggressive forms of debt relief, credit counseling generally doesn't damage your credit score. In fact, it could help improve your credit over time by establishing consistent, on-time payments. So, if you're struggling with debt and unsure of where to turn, chatting with a certified credit counselor could offer you clarity — and it may just be the first step toward a more manageable financial future.
