If you continue to ignore medical debt, it can ultimately hurt your credit rating and result in a lawsuit against you. Eventually, collectors could choose to sue you, in which case they could garnish your wages or impose a lien on your property. Antico estimates, based on an ADP report, that about 1.5 percent of U.S. employees have a garnishment on their wages for a medical reason.
When a medical debt is not paid, the health care provider can assign it to a debt collection agency. In the worst case scenario, you could be sued for unpaid medical bills. If you lose your case, a creditor or debt collector could take steps to garnish your bank account or garnish your wages as payment. Regardless of the size of the bill, it is very important that you take care of it as soon as possible.
The longer you remain unpaid, the more likely it is to be sent to a collection agency. New laws require hospitals to wait up to six months from date of service before they can be reported to a credit bureau. However, if that happens, it can stay on your credit report for years, which is likely to increase your costs of buying a home, car, or raising credit card interest rates (almost anything on borrowed credit). About 61% of people with medical debts said they experience increased stress and worry, 49% admitted to losing sleep because of medical bills and 23% were unsure if they could repay their medical debt, according to a recent report on working Americans from Salary Finance.
When that happens, information about late payments will appear on your credit report under Payment History, which represents approximately 35% of your credit score. That brand is likely to have a negative effect and lower your credit rating. The three major credit reporting agencies must wait 180 days after receiving information about unpaid medical bills before including overdue debt on their credit report. If possible, use this six-month grace period to resolve the debt, so it doesn't appear on your credit report to lower your credit score.
This only serves to increase medical bill debt, so check the cost and be prepared to make some phone calls. Relentless notices about past due medical bills are bad enough, but having a collection agency on your back is even worse. Your healthcare provider can sue you for an unpaid bill, in which case the court decides on the punishment. People can give up the care they need, including doctor's appointments, tests, treatments and prescription drugs, reports the Kaiser Family Foundation, a nonprofit organization dedicated to health policy analysis.
Under the new system, medical debt collectors cannot report to credit bureaus until 180 days after an account is delinquent. If it's any consolation, you're not the only one afraid to open the mailbox because you might find another hefty medical bill or the dreaded “final notice” in sight. The law is designed to help consumers avoid collecting medical bills that insurance is supposed to pay. If you have deposited some or all of your medical bill debt on credit cards, which transformed an interest-free bill situation into potentially high-interest debt, you may want to consider using the equity you have accumulated in your home to pay medical bills.
If you want to negotiate your bill, talk to your healthcare provider's medical billing manager, the person who actually has the authority to lower your bill. If you can't, avoid finding out what happens if you don't pay medical bills by explaining to the hospital or doctor's office that you'll need a discount and financial assistance if they want to collect the money you owe them. If you're in a similar situation, you're probably worried about the consequences of not paying medical bills. If you can quickly repay your medical bill debt after an office visit or procedure, request a cash discount.
That might not sound extreme, but once your medical bill debt is sold to collection agencies, you could have dozens of phone calls that start smoothly but eventually become more aggressive, doing everything possible to get you to pay off your debt. Raising money to pay off your medical debt through a living agreement is an attractive alternative because it doesn't require you to enter into debt. The lack of insurance and the steady increase in the cost of health care are the two main causes of the growing problem of medical debt. When those huge medical bills start to add up, many people are tempted to apply for a loan and end it.