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We’ve answered this question in a previous post.  Here it is below:

It will take multiple steps to help you eliminate your medical debt. But here are six strategies you can use to knock down those hospital bills and improve your credit rating.

Examine Everything

Start by going over all your medical bills with a fine-tooth comb. Question charges that seem inflated (like that $20 bottle of aspirin). Also, ask for explanations from your healthcare providers regarding invoices for services you don’t recognize or understand. Simply forcing them to account for everything may result is certain charges being waived or reduced.

Find Out About State Freebies

Lots of states offer their residents free mandatory coverage or health insurance with small co-pays and low deductibles. If any of your treatment should have been covered by a state program, see if state resources can fill the gap and pay what you’ve been charged.

Ask Directly for Discounts

Ask the hospitals, clinics and healthcare professionals that serviced you whether or not you qualify for any discounts, charity, or write-downs of your total bill outstanding. Don’t be ashamed to let the hospital(s) know about your entire financial predicament. They may be more lenient if they know that you’re not working, are not insured, have lots of other debts, are a single mom, etc.

Request a Payment Plan

If you can talk to a kindly, flexible billing representative/hospital administrator, or even better, the doctor(s) who treated you, ask if you can get on a payment plan. Try to stretch out the plan for as long as reasonable in order to give yourself time to pay off all that you owe. If they agree to discount $2,000 of your original $5,000 in bills, then you’ll have $3,000 remaining to pay off over time. If you can commit to pay that off in two years, that means you’ll have to pay $125 a month ($3,000 divided by 24 months).

Negotiate to Improve Your Credit Rating

Also, while you are negotiating, request upfront that the hospital agree to delete all negative references to your credit files. They may only do it once you’ve completed your repayment plan. But that’s better than letting the late payment or collection information sit on your credit reports for seven years. Get any agreements in writing.

Get a Medical Advocate

Don’t give up on negotiating down that medical debt, or to improve your credit standing. Sometimes you have to go to multiple people or write numerous letters. But it will be worth it in the end if you can rid yourself of thousands of dollars of medical bills. If your own efforts don’t get you anywhere, get help from a third party, such as Access Project (http://www.accessproject.org) or Medical Bill Advocates (http://www.billadvocates.com). For those with hefty hospital bills, The Access Project’s Medical Debt Resolution Program can guide you through the maze of negotiating with insurance companies, medical providers and public programs to resolve your medical debt.

Related articles

• How to Handle Overdue Hospital Bills (ybpguide.com)

If it was just a matter of evaluating the wisdom of using your life insurance to pay off your charge card debt, I would be inclined to tell you that it would probably be a smart move. However, there is a big wrinkle in the whole equation: namely, you stated that your job is ending soon. Normally, I would have counseled you to seriously consider paying off the debt quickly while you can – especially since taking a loan from your whole life insurance policy should have no tax consequences to you. However, the bigger issue is your looming unemployment status.

Use Insurance as a Cash Cushion in the Future

If you don’t find another job or a replacement contract, you will have to consider how you will pay all your normal monthly obligations – housing, food, utilities, transportation, and so forth. I assume you have little to no savings (or some of that likely would have paid the debt already). Unfortunately, it is taking people longer than ever to find jobs. And with 10% unemployment, 1 out of 3 job-hunters has joined the ranks of the “long-term unemployed.” This means they have been out of work for at least six months. So given the current economic environment, and the fact that your credit card debt is carrying an extremely low interest rate right now, I would suggest continuing to pay on that debt as aggressively as you can, but don’t yet tap the cash value of your whole life insurance policy. Keep it untouched for now, as a standby cash cushion that you can access in the future if things get especially tight and you can’t easily replace your income.

Saving money can be particularly tough on one salary – not to mention during an economic downturn. But there are many money-saving strategies that can boost your bank account and help you save a few hundred dollars per month. Here are some ideas:

• Save on Your Current Housing

Some of the ways you can cut your existing housing costs are to get a roommate, rent out a room, and cut back on decorations and upgrades. Needless to say, if you rent, and you decide to bring in another tenant, make sure you’re not violating any provisions of your rental or lease agreement.  Also, only pick a tenant or family member you’d be comfortable having around your kids.

• Save on Your Car

Lowering your transportation expenses isn’t always easy, but it can be done. If you live in a city with reliable public transportation, like New York or Boston, and you don’t actually need a car, consider selling it to raise cash. If you have a car and need to keep it, start following these cost-cutting tips.

Take account of all the expenses involved with having a car: your monthly car payment, gas and maintenance charges, insurance, parking, and so forth. See if you can renegotiate any of your current costs or shop around for better deals. For instance, if you’re paying $50 a month for parking at your apartment complex, can you park it outside the building and get a $50 discount from your landlord? (Obviously, you only want to do this if it’s relatively safe for your car to be parked on the street, as well as safe for you to enter your building from outside.) Then there’s insurance. Ask your insurer about any discounts for which you might be eligible: good driver discounts, lower rates for taking a defensive driving course, or even decreased premiums for having an alarm system or antitheft device. Also, by raising your insurance deductibles, you can save 10% to 25% off of your annual premiums.

Get a Lower Car Payment Via Auto Refinancing

Even your car payment itself can be re-negotiated, through a process called auto refinancing, which allows you to get a lower interest rate and a smaller monthly payment than you currently have. Many people don’t know that you can refinance your car loan just as you can refinance a mortgage. A car refinancing is faster, simpler to do, and costs virtually nothing. There aren’t any closing costs or points, like you might have with a mortgage. Most auto refinancing companies do business online. Capital One Auto Finance (www.capitaloneauto.com) allows you to refinance your car loan in just 15 minutes, saving the average customer more than $1,300 over the life of the car loan. So if your car has a high interest rate, check out a lender like Capital One to knock down your monthly car note and save yourself some big bucks. I once refinanced my auto loan with Capital One and saved more $100 a month on my car payments. Two caveats though: don’t try to refinance your car right before you go in to apply for a mortgage. You don’t want extra inquiry on your credit report. Also, if you do refinance your car, don’t extend the life of your payments. If you only have three years left to pay off your car, refinance with a lender that lets you keep a three-year payoff. Otherwise you’ll stretch out your payments and wind up paying additional money in interest charges. When you do save money with auto refinancing, apply your savings toward your home down payment or build up your cash cushion.

• Save Money on Food

Avoid wasting money on the things that can really blow your budget like eating out frequently. I’m not only talking about restaurants. I don’t have to tell you the impact of spending $50 or $75 for dinner for two. I’m talking about eating out at fast food places, or spending what seems like small change on local delis and the like. If you’re not careful, before you know it that “chump change” can really add up.

For starters, stop making your daily run for coffee and donuts or a bagel and juice before work. Many people spend about five dollars a day on these items, which equals $100 dollars a month, or $1,200 a year. Just as bad are those trips to the vending machine for junk food each day at work. If you spend $3 a day on these small items, eliminating those purchases saves $900 in a year.

At the grocery store, use coupons and choose your purchases based on the price per unit for everything from toiletries to food products, and take advantage of sales and reward cards from retailers who offer discounts to repeat customers.

• Save Money on Medicine

I love to tell people to do a makeover to save money – not a personal makeover, but a makeover of their medicine cabinet at home! This is an area to which most people never pay any attention. You probably don’t either. I’m sure many of you adore brand-name clothes and shoes, but when it comes to medicine, you don’t need brand-name products. Get generic drugs from your doctor or pharmacist. By law, generic drugs have the identical chemical makeup and active ingredients as brand-name medications—without the hefty price tag. The typical brand-name prescription costs $100, while the average generic drug is just $30, a 70% difference. If you hit the pharmacy once a month, in the span of a year you’ll save $840 just by using generic drugs instead of brand-name prescription drugs.

• Save Money on Household Items

Get creative about stretching the stuff you already buy and use at home on a regular basis. We all need toothpaste, right? To save money reach for the tubes, not the pump toothpastes sold in many stores. Why? Pumps don’t last as long as tubes, so they give you less bang for your buck. What about that deodorant you buy. Did you know that budget-conscious people purchase sticks or roll-ons because aerosols get used up faster? (Not to mention that aerosols are less friendly to the environment.)

• Save Money By Kicking Bad Habits

If you have a habit that’s hurting you, financially or health-wise, it’s high time you kicked that habit. Take cigarettes as a case in point. The average pack of cigarettes costs $4, excluding state taxes. If you smoke two packs a day, that adds up to $10 daily (taxes included) just for the “pleasure” of sucking on a nicotine stick! Do your best to rid yourself of that bad habit. If you can, you’ll save $300 dollars a month or $3,600 dollars a year, not to mention the savings you’ll reap from fewer medical bills.

• Save Money on Utilities

Being a lot more conscientious about your habits around the house can help you save thousands of dollars on utilities. Here’s how to be savvier in this area. Unplug appliances when you’re not using them. That goes for toaster, coffee maker, blender, and other appliances. Leaving them plugged in is just draining power and wasting money unnecessarily. If you make a habit of unplugging these items, you’ll save 10% on your energy bills. The same thing goes for wasting energy by having so many lights on in the house. Turn off lights when you leave a room. Also, switch high-watt bulbs to lower-wattage ones or fluorescent bulbs to save even more money. Lower your hot water costs by up to 50% just by taking showers instead of baths. Only run your dishwasher, clothes washer, and dryer when they’re full for additional savings on your utility costs.

• Save Money on Clothes

Do you want to save money on clothes? Well, at the risk of being called a “traitor” by my own people (i.e. those of the female persuasion), let me start by making this suggestion, especially to you ladies: just stop shopping so much! OK … I’ve said it. I had to get that off my chest because so many people I know, particularly women, moan about how they don’t have any money whatsoever. Somehow, however, they always seem to have the money to go shopping for clothes – either with cash or credit. If you must go shopping, go when there’s a sale, or use those store coupons that come in the mail or that you can find in the newspaper in which your favorite retailer advertises. Additionally, save yourself money by simply shopping around. Take advantage of some really great deals you can find on the Internet. Quit always buying designer labels. Places like H&M and Target have really cute clothes, too, and usually no one will ever know that you bought that nice pair of jeans from a discount store or an outlet. If you make it a practice to avoid paying full retail price for your clothes, you can save yourself hundreds, if not thousands, of dollars in the course of a year. Ditto on clothes for the children. Check out bargains at Target or WalMart, as opposed to pricier retailers like Children’s Place or Macy’s. Why do we insist on spending gobs of money on high-priced shoes, clothes and outer-wear for our kids – knowing full well that those children are going to grow out of those items so quickly?!

• Save Money on Entertainment

When you’re building your cash cushion and trying to get a down payment together you might think that all things fun have to go out the window. Not so. You can enjoy yourself plenty if you do it the smart way – namely by sticking to free or low-cost forms of entertainment. For example, choose free museums and local cultural spots and historic venues over other activities that cost money. If you’re dating, have picnics in the park or cook your sweetie dinner at home, rather than the traditional movie and restaurant thing. If you’re a partier, get to the club early to avoid paying a cover charge. Better yet, go to someone’s house party where there’s no price for admission, except maybe an inexpensive bottle wine if you want to bring one to your host. The idea is to select fun diversions that won’t bust your budget.

• Save Money on Miscellaneous Expenses

Here are some other ways you can cut back on the dollars going out your door. This advice comes from AmericaSaves.org:

Notice that if you follow all these tips, you can save $237 a month – in addition to the many thousands of dollars saved annually using the strategies I recommended earlier. That’s a nice chunk of change to set aside for the future, isn’t it?

Even if a bank says you’re getting a “no cost” mortgage – perhaps because they are not charging points on the loan – that doesn’t mean the loan itself is truly “free” or really being offered at zero cost to you. Banks aren’t in the business of loaning money, and doing all the work required to close a mortgage loan, free of charge. So here are examples of the common fees you might see when you obtain a mortgage – along with estimated costs. These costs can apply to both initial home purchases and refinanced home loans. Obviously, prices for different products and services can vary based on where you live and other factors. Nevertheless, the numbers presented below will give you an estimate – or in some cases a range – of what you can typically expect to pay for your mortgage.

• Typical Closing Costs on a New Mortgage:

Description of Fee Cost

Application Fee                         $150-$400

Appraisal                                  $200-$400

Closing Fee                               $250-$350

Credit Report                            $15-$50

Document Prep Fee                  $150-$300

Flood Certification                     $10-30

Legal Fees                                $250-$750

Loan Origination Fee                 Usually 1% of the loan

Points                                       Each point is 1% of the loan

Recording Fee                           $25-$50

Survey                                      $150-$300

Taxes                                       Varies (See more info below)

Termite Inspection                     $50-$100

Title Insurance                          Varies (See more info below)

Some loan costs – like interest on your loan and property taxes – must be escrowed, meaning that you pay for them for a few months, up to a year in advance. The same is true for homeowners’ insurance, which covers the house in case of a fire or another disaster.

Insurance Costs for Your Home Loan

Other insurance you have to pay includes title insurance, which is an indemnity policy that provides protection against any loss that arises due to problems with the title (or ownership) of your property. Lenders require you to have title insurance because if the title is “faulty” – due to a tax lien, judgment or some kind of encumbrance on the title – then title insurance covers the lender. As is the case with mortgage insurance, you bear the costs of title insurance (in a single, up-front payment), but your lender receives the protection for this coverage.

Title Insurance Varies Based on Several Factors

Title insurance costs vary greatly nationwide, partly because the title insurance premium you pay often covers different services, depending on the company you use and where your home is located. For example, in some places your premium simply covers the lender for any title-related losses. In other places, though, the premium covers losses, as well as the cost of a title search, title examination, and closing services. Title insurance also varies based on the size of the mortgage.

Watch Out for “Junk” Fees Charged By Some Lenders

Junk fees are those charges imposed solely to add to a lender’s profit margins. In many cases, these fees have legitimate or official sounding names, like “document preparation fee.” In truth, however, they’re really just creative ways for lenders to pad their bottom line at your expense. Many lender charges that have the word “fee” slapped on the back of them are a dead giveaway that you’re being charged for services that lenders are supposed to provide anyway. If you get charged for an “underwriting fee,” a “loan review fee,” a “warehousing fee,” or other such nonsense, do not hesitate to ask the lender to waive those fees – or at least substantially reduce them. Even things like the “application fee” or the “loan processing fee” can be eliminated or cut, if you are savvy enough to ask.

How to Decipher Your Good Faith Estimate

When you obtain a mortgage, you will pay four sets of fees: Lender Fees, Title and Third Party Fees, Escrow and Interest Fees, and Government Fees. Each set of fees will be outlined in your Good Faith Estimate. Remember, however, that the GFE is not binding on a lender. In fact, it’s likely to change at least once – right after your loan is approved. Later, when you go to the closing, take your Good Faith Estimate with you and compare it against the final bill you get at closing. That final bill is described as a HUD-1 Settlement Statement. For now, however, let’s take an in-depth look at the fees you’ll pay at closing as revealed in your initial Good Faith Estimate.

• Lender Fees

Payments you make to a lender in order to obtain a mortgage can range from loan discount points to mortgage broker fees or underwriting costs. In general, lender charges include any fees that go directly to the financial institution providing your home loan.

• Title and Third-Party Fees

Third-party fees for home borrowers include the costs for flood certification, appraisals, pest inspections, your title search, and title insurance.  Third-party fees are paid to outside vendors or other companies, not your lender. In many cases, however, your lender might be affiliated with those third parties.

• Escrow and Interest Fees

Lenders often require you to make advance payments into an escrow account to make sure you don’t fall behind on your property taxes, homeowner’s insurance, loan interest, or private mortgage insurance. Other escrow items include so-called “interim,” interest, which is the daily mortgage interest cost you pay from closing through to the end of that month.

• Government Fees

Most city, county, or state agencies require property transfer taxes or other levies for real estate purchases. Other government agencies charge for your mortgage deed to be recorded. These fees will all be detailed in your Good Faith Estimate. You can tell which fees are likely to be negotiable by carefully reviewing your Good Faith Estimate. On the GFE, you’ll notice that fees are grouped into numerical categories that range from the 800s to the 1300s. Your lender’s charges fall into the 800s category, and will include anything from application fees to loan origination charges or underwriting fees. These are the items that are most open to negotiation.

Questionable Fees You Should Contest

Anything classified as a “review,” an “administrative” or a “document prep fee” should be questioned. Lenders will say that they charge for these items because loans have to be processed, underwritten, and reviewed. However, there’s no justification in charging these junk fees to consumers for several reasons. First, lenders use automated underwriting systems, which spit out approval or denials in a matter of minutes. It’s not as if some underwriter is spending weeks working on your mortgage application. Additionally, administrative and underwriting services are part of the normal course of a lender’s business. Lastly, even if you should have to pay for these expenses – which you shouldn’t – many lenders inflate these charges, saddling consumers with $500 “processing” or “administrative” fees – costs that far exceed the lender’s actual incurred cost.

Fees Required to Be Paid In Advance

Fees that fall in the 900s category on the Good Faith Estimate represent items required by your lender to be paid in advance. Examples include pre-paid interest on your loan, mortgage insurance premium, or a hazard insurance premium. Likewise, fees in the 1000s category on your GFE are for reserves you must deposit with the lender, for expenses like property taxes or flood insurance. Generally speaking, you won’t be able to negotiate away pre-paid costs that your lender mandates. However, you can save money on these items in other ways. For instance, you can schedule your closing toward the end of the month to reduce the number of days of prepaid interest you pay at closing. Also, you can shop around for the best rate on hazard insurance – the cost of which will be listed as item 903 on your Good Faith Estimate.

Beware of Costly Mark-ups

Most title charges and third-party fees will show up on the 1100s section of your Good Faith Estimate. Here you will the costs you must pay for title insurance or for title searches, notary fees, attorney fees, and perhaps other expenses, such as overnight courier service. Sometimes, third-party fees – like charges for an appraisal or the cost to run your credit – might appear in the 800s section instead of in the 1100s area of your Good Faith Estimate. These are legitimate third-party fees because your lender does incur these expenses. However, you have to watch out for lenders or brokers who try to pad these charges and impose a markup on them. To reduce the risk of this, let your lender know upfront (i.e. after you’ve been approved for your mortgage) that you want receipts for all third-party expenses you incur.

In states like Texas and Florida, title insurance premiums are set by the state. But in other places, you can save yourself money by shopping around for title insurance, a title exam, and attorney’s fees. Many lenders will suggest that you use their title company or lawyers, but you don’t have to – especially if you can find better deals on your own.

If I understand you correctly, you were covered by health and/or medical insurance but a medical company accidentally filed your claim with the wrong company – or under the wrong insurance plan. Either way, the mistake was clearly not yours and you did, in fact, have insurance coverage. You also stated that your credit score dropped by 80 points due to this error. Based on the scenario you described, yes, in all likelihood your credit score will increase substantially once this matter is cleared up – assuming there are no other changes to your credit profile. By changes, I mean, you don’t add any substantial new debt to your credit cards, open new accounts, miss any other payments, etc. In addition, there are several other steps you can take to safeguard yourself. Read more tips below.

What to Do Next

To stay on top of this matter, do these four things:

1) Call your insurance company regularly

Talk to someone in the accounts payable department or whoever is handling incoming claims. Find out the status of your claim and ensure that it gets prompt attention. Don’t be a pest, but stay in constant contact with them. Call once a week for status updates. If you can, get a letter in writing, stating the date the claim came in and if it was paid partially, or in full.

2) Follow up with the medical company that filed the claim

This is the entity that seems to have made the initial error that caused your credit report to be marred and your credit score to drop. Unfortunately, it’s also the organization that will ultimately have to contact the credit bureaus to request that the collection account be removed. So treat them cordially when you call. But politely demand that they not drop the ball. Ask that they fix their mistake and remedy your credit reports with Equifax, TransUnion and Experian – by deleting all references to the account. If they just change it to “Paid Collection,” “Settled,” or something like that, it won’t help your credit score.

3) Monitor your credit

Start regularly monitoring your credit reports to watch for when the collection record drops off your credit files. FreeCreditReport.com and myFico.com both offer helpful credit monitoring services.

4) Document everything

If something goes amiss, or that collection account is not removed from your credit reports in a timely manner, you want to have proof of what went wrong. So keep a journal or log of everything. Document the names of people you talk to; maintain detailed notes about the dates of phone calls and written correspondences; and keep track of what anyone says with regard to your situation. This information will be valuable if you have to dispute the collections account with the credit bureaus.

Lastly, know that the law is on your side. Under the Fair Credit Reporting Act, credit information that is outdated or erroneous is not permitted to be entered on your credit reports.