Medical Bills and Your Mortgage: How to Keep Your California Home
You're dealing with enough. A health crisis shouldn't mean losing your home too. Medical bills are the #1 cause of bankruptcy in America, and many people facing illness also face impossible financial choices. There are ways through this.
Medical emergencies don't just affect your health - they devastate finances. Between treatment costs, lost wages from being unable to work, and the stress of recovery, your mortgage can feel impossible. Here's what you need to know about protecting your home.
The Most Important Thing to Understand
Medical debt and mortgage debt are fundamentally different. Medical bills are unsecured debt - collectors can call you, sue you, and damage your credit, but they cannot directly take your home. Your mortgage IS secured by your home - miss those payments and foreclosure becomes possible.
This distinction matters because it affects how you prioritize payments when money is tight.
How to Prioritize When You Can't Pay Everything
- Mortgage / Rent - Your home is the foundation of everything else
- Utilities - Electricity, water, heat are essential
- Food and medications - You can't recover without these
- Car payment - If needed for work or medical appointments
- Medical bills - These can be negotiated, disputed, or included in bankruptcy
Protecting Your Home During Medical Crisis
Step 1: Contact Your Mortgage Servicer
Call your servicer and explain you're experiencing medical hardship. Ask about:
- Forbearance - Pause or reduce payments while you recover
- Loan modification - Permanently lower payments if your income has changed
- Hardship programs - Many servicers have specific medical hardship options
Step 2: Document Your Medical Hardship
When applying for mortgage assistance, you'll need to explain your situation. Gather:
- Letter from doctor explaining condition and impact on work
- Documentation of lost wages or reduced income
- Medical bills showing financial burden
- Statement of your ability to resume payments after recovery
Step 3: Address Medical Bills Strategically
Don't let medical debt collectors panic you into paying them instead of your mortgage:
- Negotiate - Hospitals often reduce bills by 20-50% for financial hardship
- Payment plans - Most providers will accept small monthly payments
- Charity care - Many hospitals have programs to reduce or eliminate bills
- Dispute errors - Medical bills are frequently wrong; request itemized statements
- Don't use home equity - Converting unsecured debt to secured debt puts your home at risk
When Bankruptcy Makes Sense
If medical bills are overwhelming and you're falling behind on everything, bankruptcy may actually protect your home while eliminating medical debt:
- Chapter 7 - Eliminates most medical debt; won't directly save your home but gives you breathing room
- Chapter 13 - Eliminates medical debt AND lets you catch up on missed mortgage payments over 3-5 years
Talk to a bankruptcy attorney about your specific situation. Many offer free consultations.
California Mortgage Relief for Medical Hardship
If your medical situation was related to COVID-19, you may qualify for the California Mortgage Relief Program - up to $80,000 in assistance for past-due payments. This is grant money you don't repay.
Visit CaMortgageRelief.org or call 1-888-840-2594 to check eligibility.
You're Not Alone
Medical hardship is one of the most common reasons people seek mortgage help. Lenders see this constantly - your situation isn't unique or shameful. Programs exist specifically because life happens to good people.
Dealing with Medical Bills and Worried About Your Home?
We help California homeowners navigate financial hardship. Free, confidential consultation.
Call (949) 565-5285Focus on getting well. We'll help with the house.