According to CNBC, more than 137 million Americans faced financial hardship due to medical costs in 2019 alone. In other words, medical debt is a huge financial crisis in the U.S. Add that to the growing number of Americans who are already in debt with credit cards and other expenses, and we have an alarming number of people in trouble financially.

So, what happens to someone when they suddenly face a medical crisis when they’re already in debt? Do they file bankruptcy, take out a second mortgage, or let everything go? Can they feasibly manage the mounting debt they’re likely to incur? The answers to these questions will depend on each individual’s circumstances, but it’s important to know that you’re not alone in this situation and that there are options available you might not have thought of.

Prioritize your health.

One of the worst things you can do in a debt crisis scenario like this is to make your health care a low priority. This can lead to more serious conditions that can cost you even more time and money down the road. Instead, keep up with routine health care and look for any signs that you need further treatment or evaluation.

Also, keep in mind that a lot of symptoms you experience might not be as serious as you think. For example, if you’re experiencing dizziness, nausea, or vertigo, it might not be related to something fatal. It’s possible that it could, instead, have something to do with your inner ear. If you do experience dizziness, it’s a good idea to see an audiologist and get a dizziness test. While this is an urgent matter, it can usually be easily treated and you can regain your regular quality of life.

Know your legal rights.


Many people who get themselves into debt don’t know their rights when it comes to paying creditors back. Arming yourself with some basic knowledge of federal law might help ease some of the stress that comes along with financial difficulties. For one thing, collection agency harassment is illegal. Debt collectors can’t bully, mislead, lie, or contact third parties about your debt. Furthermore, medical debt collectors are subject to even more restrictions. They have caps on how much interest they can charge and they’re not allowed to send a debt to debt collectors until 120 days after the first bill.

If any of this is happening to you or you feel you might be the victim of a scam, it might be necessary to get legal advice from a respected law firm or other Legal Rights Advocates about your particular situation. Collection phone calls and text messages can become overwhelming and stressful, especially if you’ve received a scary medical diagnosis that will lead to more debt. Don’t let them continue when there are some things you can do to stop them, even if that requires filing a lawsuit.

Don’t be afraid to ask for help.

The first thing to do when you’re struggling with medical debt is to talk to your providers to see if they will negotiate. Hospitals and private providers have the authority to lower or drop your medical bills and many of them actually set a certain amount of their budget aside for these situations. You will, however, probably have to be willing to share some personal information so that they can get a clear picture of why you need help. If they’re unwilling to budge on your bill amounts, ask them if they have any indigent funds available. Most facilities work with other agencies to help people with limited resources.

Additionally, it may be time to swallow your pride and ask for help in other places. Your church, for example, may have some available resources they’d be glad to help you with. Or you may wish to start a collection on a site like GoFundMe where you can share your story online and ask for donations. And your family probably won’t object to hosting a fundraiser on your behalf. These are often done by selling things like customized t-shirts, meals, or garage sale-type items. The point is to let everyone around you know you’re struggling and allow the ones you love to offer you a hand.

Analyze your situation.

If you’re unable to negotiate your medical payments or get enough help from those around you, you probably need to take a serious look at where you stand. It’s a good idea to discuss your situation with your attorney or financial planner if you have one, and decide whether or not bankruptcy is an option for you. Unfortunately, you can’t just file bankruptcy to discharge medical debts, however, so consider how this will affect your finances. This is especially important if you’re leaving a family member behind, like a spouse, that will also be affected.

Find extra money.


It might go without saying, but possibly the best way to get out of debt is to find extra money. This can come in the form of saving money, selling some belongings, or earning an extra income. The method is up to you, but when you’re in a crunch, you might be surprised by how creative you can get with your cash. The important thing is to prioritize. In other words, figure out what means the most to your family and what you can do without. Could you downsize your home and use the proceeds to pay off your bills? Do you have extra properties you were saving for retirement? During a medical crisis, most people figure out that most of their stuff is non-essential and would do them much more good if they were liquidated. Just talk to your financial advisor or CPA before any big transactions so that you’re not hit unexpectedly by excessive capital gains taxes at the end of the year.

If your health allows, there are also hundreds of ways to earn extra money on the side, and most of them don’t require a lot of physical exertion. You can house sit, drive for Uber, tutor, substitute teach, freelance write, deliver papers, or clean houses, just to name a few. And any of these can be done on your own time when you feel up to it. And some of them even have unlimited earning potential. Also, look for corners you can cut. Negotiate your cable and cell phone bills. Learn to create a budget and stick to it. Clip coupons and shop sales when you absolutely have to make a purchase. Any little thing you can do to reduce spending will allow you some extra money to pay off those medical bills.

Cash in your life insurance.

Another way to get your hands on extra funds to get out of debt if you’re fighting a terminal illness is to cash in your life insurance policy. The easiest way to do this is with a viatical settlement. Not many people know what a viatical settlement even is, although it’s a great option for getting a cash payout if you need extra income. A viatical is where a financial company agrees to pay you an agreed-upon surrender value for your life insurance policy, making them the beneficiary of your policy’s death benefit. Before you do this, however, familiarize yourself with viatical settlement taxation laws. These settlements are not taxable, but you might want to get extensive tax advice from your CPA so that they’re aware of the situation.