How to Handle Medical Debt

In recent years, the majority of people filing for bankruptcy have cited medical issues as one of the key contributors to their strained financial situation. Medical issues can cause a financial downfall in two ways. The first is the high cost of healthcare in the country, and the other is the time off from work people need to recover from their medical issues.

Although bankruptcy should always only be a last resort, it is easy to see why medical debt drives so many borrowers to it. On average, healthcare spending per person in the United States cost $11,945 in 2020. That is more than $4,000 more per capita than any other high-income country. If you are suffering from medical debt, our Broward County debt defense lawyer explains different ways to handle it below.

Be Proactive

Once you have received a costly medical treatment, there is nothing you can do about the debt incurred by it. To avoid future medical debt, you should always get quotes in writing. If you do not, the medical provider may charge you more than you had agreed to, and it may be for an amount you cannot afford.

If you have to receive treatment in a hospital, ask your medical team if they work out of network. For example, if you need surgery, you should ask your anesthesiologist if they are out of network. If they are, it means they do not have a contract with your insurance provider. That may result in your insurer not covering the procedure, and leaving you to pay it out of your pocket.

Know What to Expect

If you fail to pay your medical bills, the hospital or your doctor’s office will first make many attempts to contact you regarding the debt. If you do not respond or pay the debt, it is then sold to a medical debt collection agency. Accounts are usually sold to these agencies once the debt has been unpaid for 60 to 120 days. After the agency has purchased your debt, they will then start to call you, email you, and they may even text you.

Continuing to ignore the debt at this point will hurt your credit score. The debt collection agency will report you to the credit bureaus, and the medical facility you originally owed the debt to may have also reported the debt. If you still do not pay the debt, the collection agency may then file a lawsuit against you. If they obtain a judgment against you, they can then garnish your wages, levy your bank account, and more to recover the debt.

It is important to note that even though a debt collection agency may have the right to file a lawsuit against you, there are certain actions they cannot take. Debt collectors are never allowed to harass, threaten you, or call you at unreasonable times.

Recent Changes to the Law on Credit Scores

While medical facilities and debt collection agencies can report your debt to the major credit reporting bureaus, there have been significant changes to the law recently.

As of July 1, 2022, the major credit reporting bureaus – TransUnion, Experian, and Equifax – will automatically remove paid medical debt from borrowers’ credit reports. This means if a medical debt has been paid, it will no longer be shown to anyone checking a person’s credit report and will no longer affect their score. Additionally, while medical facilities and healthcare personnel currently have to wait 180 days before they report an unpaid medical debt to the credit bureaus, that will increase to one year. Lastly, if your medical debt is less than $500, it will not impact your credit score.

Review Medical Bills for Mistakes

If you receive a medical bill or expenses you did not expect, it may have been billed in error. Call your doctor and ask them how the procedure was coded, as miscoding is a big problem in the healthcare industry. These mistakes can cost patients thousands of dollars. You may have also been billed twice for the same procedure, or the hospital fees may be erroneous.

Medical billing errors can become very expensive. You have the right to ask for an itemized bill so you can review it looking for mistakes that need correcting.

Negotiate Medical Costs

People often think that medical bills are non-negotiable, but that is not true. You may be able to negotiate with your medical provider for a lower amount. Debt collection agencies are also very accustomed to negotiating the debt of borrowers.

Medical providers and debt collection agencies are willing to negotiate the debt for many reasons. In many cases, they would rather receive a guaranteed lump sum, even for a lower amount, than risk not recovering anything on the debt at all. They may also discount the debt if you make a down payment and then pay the rest of the balance slowly over time. If you are uninsured, the healthcare facility may be even more willing to negotiate your total balance.

Consider Bankruptcy

Filing bankruptcy is never anyone’s first choice, and it never should be. However, it is an option that can help when you are suffering from a significant amount of debt you do not think will be able to repay. Before you file, consider the decision very carefully. A bankruptcy can remain on your credit report and affect your credit score for up to ten years, which may be much longer than the medical debt you initially owed.

Call Our Debt Defense Attorney in Broward County

At Loan Lawyers, our Broward County debt settlement lawyers know the strain medical debt can put on your finances. If you have debt you cannot pay, we can negotiate the balance with medical providers and debt collection agencies. We can also advise on whether bankruptcy is a good option for you and if so, help you throughout the entire process. Call us now at (954) 523-4357 or reach out to us online to schedule a free review of your case.