What happens if you don't pay medical bills?
Unpaid medical bills can lead to debt collection, lawsuits, wage garnishment, and damage to your credit score. However, there are options to manage or reduce medical debt, including negotiating with providers, seeking financial assistance, and creating a payment plan. Addressing medical bills as soon as possible and understanding your rights can help prevent more serious financial consequences.
Consequences of Not Paying Medical Bills Over Time
Failing to pay medical bills over time can lead to serious financial consequences, including late fees, damage to your credit score, wage garnishment, and even lawsuits. To avoid these outcomes, it is important to address medical bills early by negotiating payment plans, applying for financial assistance, or seeking help from charity care programs if possible.
If you are unable to pay your medical bills, it is wise to take proactive steps that can prevent the situation from escalating and protect your financial well-being.
Impact on credit score
Unpaid medical bills can hurt your credit, but there are important details and protections you should be aware of. First, medical providers don’t directly report unpaid bills to credit bureaus but if you do not pay your medical bills, the provider may eventually send the debt to a collection agency, which will report the unpaid debt to the credit bureaus.
Credit bureaus must wait 180 days before adding unpaid medical bills to your credit report after the debt goes to collections. This grace period gives you time to work out payment with the medical provider or your insurance company.
The new models treat medical debt less harshly than other types of debt, meaning that medical collections will have a smaller impact on your credit score compared to credit card bills or personal loans, but they can still lower your score.
It’s also important to know that once the medical debt is paid off, the credit bureaus will remove it from your credit report. Medical debt is treated differently than other debts that can stay on your report for seven years, which helps improve your credit score faster.
Debt collection
Debt collection can occur when a medical provider (such as a hospital or doctor's office) transfers or sells unpaid medical bills to a collection agency after they have gone unpaid for a certain period. Once the debt is in collections, the agency will take steps to recover the amount owed, which may include contacting you, reporting the debt to credit bureaus, and even taking legal action in some cases.
Legal action
If medical debt remains unpaid for an extended period of time, the collection agency may file a lawsuit to recover the debt. If they win the lawsuit, they could obtain a court judgment that allows them to garnish your wages or seize assets.
How to deal with debt collection?
If your medical debt has been sent to collections, you should first verify that the debt is valid before paying anything. You can ask the collection agency to verify the debt and provide proof that the debt is yours and that they have the right to collect the debt. You should then carefully check to see the amount owed is correct and confirm that your insurance has paid its share. You have the right to dispute any charges that are incorrect or should have been covered by insurance.
Every state has a statute of limitations on debt, which limits how long a creditor or collection agency can sue you to collect the debt. This period typically ranges from three to six years, depending on the state. If the statute of limitations has expired, the collection agency cannot sue you, but they can still attempt to collect the debt, and it may remain on your credit report for up to seven years from the date of the original delinquency.
If you believe a debt collector is violating your rights or harassing you, you have the right to file a complaint with the Consumer Financial Protection Bureau, the Attorney General of your state, and/or the Federal Trade Commission.
Given the complexity of medical debt collection, it is advisable to consult with an experienced consumer protection attorney who can help you understand your rights and options.
Debt settlement
You may be able to negotiate to pay a reduced amount than what is owed. If you cannot pay the debt in full, ask for a payment plan that breaks down the total into more manageable monthly payments.
Negotiate with creditors
Collection agencies frequently accept lower amounts since they buy debts at a discount. Don’t be afraid to negotiate with creditors directly. You or your attorney may be able to negotiate terms that are much more favorable.
Can Medical Debt Be Forgiven?
Yes, medical debt can sometimes be forgiven, but it typically requires taking proactive steps such as applying for charity care, negotiating with healthcare providers, or seeking help through government and nonprofit programs.
In some cases, bankruptcy can also provide relief from medical debt. The key is to explore all available options based on your financial situation.
What to Do If You Can’t Pay Your Medical Bills?
If you are unable to pay your medical bills, you may be able to receive financial aid to help you. Many hospitals and medical providers offer financial assistance programs to help low-income patients with medical bills. If you’re eligible, these programs could reduce or eliminate your medical debt. Additionally, nonprofit hospitals are legally required to provide charity care to patients who meet certain income requirements, so always inquire about these options.
If you do not qualify for assistance, you should still receive the medical care you need regardless of your ability to pay.
If your medical debt has become unmanageable and you are unable to resolve it through negotiation or payment plans, bankruptcy may be the best option. With Chapter 7 bankruptcy, medical debt is dischargeable, meaning you may be able to eliminate it entirely. With Chapter 13, you can include medical debt in your repayment plan, which allows you to pay off a portion of the debt over three to five years, with the remaining debt being discharged once the repayment period is completed.
