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What to Do About Medical Bills?

Jim Shout Feb. 10, 2022

No one is immune to medical bills, and even those with insurance can find themselves drowning in medical debt. Just one bad debt can cost you hundreds of dollars down the line and can haunt you for several years.

However, medical bills don’t have to be a constant worry in your life, and if you are worried about the bills affecting your credit, there are ways to deal with them.

How Do Medical Bills Affect Your Credit?

Different factors of medical bills can affect your credit in varying ranges. For example, a charge-off and bad debt can have a bigger impact on your credit than other factors. Let’s go over the main difference between the two.

A charge-off is when the company declares you owe them money, and they write it off by charging it against their income tax. This doesn’t mean that you don’t owe anything; it just means that they can’t do anything with you until you pay the entire balance or come to some payment agreement.

Bad debt is when the amount owed to the medical provider or other company has not been paid, but they haven’t written off your account as a loss.

Both charge-offs and bad debt account for 35% of a person’s credit rating and will affect your credit score the most.

It boils down to knowing how much you owe compared to your available credit limit. If you maxed out on all of your cards, that would negatively affect your score. Even if you do not have over 50% utilization, having balances on many different accounts can hurt your credit rating.

How Long Do Medical Bills Stay on Your Credit Report?

A person with an established credit history will have a higher score than someone who just recently started being responsible about their bills. The longer you can maintain your account with no missed payments, the better your score will be.

But even if you can make payments over time, the unpaid balance will still show up on your credit report for seven years from when it went to collections.

This is called the “remaining balance” and is marked as a negative item on your credit report. However, it will not affect your score as much as an unpaid bill or collection account would.

Frequent late payments or the number of times you have been 30 days late on an amount can also affect how a medical bill affects credit scores.

If you have an otherwise good credit history, being 30 days late on a payment will have a relatively small negative impact on your score. You can negotiate this down to 60 or 90 days late if you are willing to call the creditor and explain your situation.

These findings show how important it is to prioritize repayment for patients struggling with multiple bills. If you can make payments on some of your medical debts, it will improve your score and make it easier to keep up with payments.

How Long Before Medical Bills Go to Collections?

Collection agencies are not health care providers, and their only concern is getting paid. Your medical bills go to collections when someone fails to pay them back on time or when your provider gives up on you.

You might receive letters and phone calls from third-party companies trying to collect your unpaid medical bills. So collection agencies are often the last resort you have if your account is over $500. Making sure that you stay on top of your bills will help keep your financial status from getting worse.

Every health provider has policies and usually waits anywhere from 60 days to 180 days before sending your debt to a collection agency. However, you have the option to reduce the cost of your hospital billing before it gets sent for debt recovery.

You may find a financial aid program to help you cover the bill. These programs are often funded by government or local organizations.

Here are some tips that you may consider to get rid of every single medical bill that is still outstanding.

Be Proactive

You should be proactive and look for a payment plan to make the bill easier to manage. Make sure to contact your hospital first and inquire about their financial aid program. You may qualify if you cannot afford medical treatments or hospitalization costs, so don’t hesitate to ask for help!

If you are denied financial aid, extracting a lower bill settlement is the next option. If this does not work, then it’s time to look into debt settlement or proceed with contacting a collection agency for your hospital billing.

Contact a Non-Profit Agency

Many agencies out there offer help for people struggling with medical debt. If you need assistance, make sure to contact one of these agencies and see if they can assist with your hospital bill.

You may get relief by contacting a non-profit agency specializing in medical collections. They will use every tool available to get your hospital bill down as much as possible, often by working with your local hospital and negotiating on your behalf.

The lower you start, the more wiggle room your agency will have to reduce your hospital bill even further. Once an agreement has been reached, you will be off the hook and settle your medical debt.

Consult with A Reputable Debt Settlement Agency

If you can’t afford to pay in full and don’t qualify for a payment plan or financial aid, then it’s time to call in the big guns!

Consult with a reputable debt settlement agency that might help you reduce the cost of your hospital bills or set up a monthly payment plan that you can afford.

Don’t worry; plenty of agencies are out there willing to help you take care of your medical debt. It’s simply a matter of finding the one that will work best for you and your situation. And make sure not to take any verbal promises at face value because it could lead to many problems down the road.

Write an Explanatory Letter

Even if you don’t meet specific criteria, there is still some wiggle room to reduce hospital bills. Write an explanatory letter that justifies your inability to pay back on time or at all.

Make sure to point out that the financial strain caused by paying for medical care made it impossible to settle your medical debt.

What Happens if You Don’t Pay Your Medical Bills?

The other possible outcomes of not paying medical bills include being sued by a creditor, having your wage garnished, or even losing your professional license.

While the medical bills may have been accrued during treatment for an illness or injury, it does not mean that creditors cannot file suit against you. It is important to determine whether exceptions exist for medical debts under your state’s law.

Suppose you find yourself unable to make a payment on a medical bill that has gone into collections and has resulted in a warrant for your arrest or other court actions such as filing a suit against you.

In that case, it is essential to determine whether you have options available to you before accruing more debt and damage to your credit score.

One way of avoiding legal consequences from not paying medical bills is by filing for bankruptcy.

According to the American Bar Association, bankruptcy provides an opportunity to get rid of undesirable debts such as medical collections if income requirements are met. This allows individuals to get a fresh start by discharging obligations they are no longer required to pay.

Take Action Against Your Medical Bills Today

The last thing you want to do is sit around and hope that your medical bills magically disappear. There are many ways for people with piling debt to get back on track, but that all depends on the specific circumstances of their case.

If you face financial difficulties or are threatened legal action by debt collectors, reach out to an experienced bankruptcy attorney. Don’t wait until it is too late – act now before it ruins your financial future.