How Is Medical Debt Different From Other Debts?
Medical debt is one of the most unique types of debt. After all, no one sets out to get themselves into medical debt. Usually, medical debts pile up due to unexpected illness or injury, and there’s a good chance of billing confusion in these scenarios.
Maybe you thought your insurance would cover your medical procedure, and in fact, it did not. Or perhaps you set up a payment plan with a medical care provider for an emergency procedure, and now you’ve fallen behind on payments.
However they came about, medical debts can cause financial stress and hardship because of something you never wanted to experience in the first place. Making matters worse, it’s not uncommon for errors in billing when it comes to medical debts, creating considerable confusion about whether you owe the debt or not.
When you’re burdened by debt that may not even be yours, it may feel like all financial hope is lost, but thankfully there are numerous ways to get help with medical debt and collections. In this article, we will cover what impact you can expect from medical debt, how you may be able to cut medical bills in a big way, and how you can get back on track financially as quickly as possible.
Do Medical Debts Lower Your Credit Score?
An important fact to be aware of when it comes to medical debt is how it can affect your credit score. If your medical debt is a payment plan with a hospital, this likely won’t show up on your credit and cause issues. However, if your medical debt is held by a collection agency after not paying the healthcare provider, this collection may show up on your credit report and drag your score down.
What Happens If You Can’t Pay Your Medical Debts?
If you’re unable to pay your medical debts, your options will largely depend on who holds the medical debt. Is the medical debt a payment plan set up directly with a hospital, or is the medical debt a collection for a bill you didn’t think was yours? If the debt is still held by the original medical service provider, you have a decent chance of restructuring the payment plan to get back on track.
Hospitals, doctor’s offices, and medical specialists would far rather directly collect as much as they can on the services they provided than have to sell the debt for pennies on the dollar to debt collectors.
When your debt is still held by the original medical service provider, your best option is to call them up and try to work out a new payment arrangement to avoid it being passed to a collection agency.
If your medical debt is already held by a collection agency, it’s still good to first try to deal with the original medical provider directly. Sometimes this isn’t an option, unfortunately, so the next step would be getting the debt validated in writing by the medical debt collection agency.
Will Medical Providers Garnish My Wages For Unpaid Bills?
Unfortunately, hospitals can and often do garnish wages for unpaid medical bills they’re unable to collect in a timely manner—even nonprofit hospitals. Medical providers will pursue legal action against their patients so they can collect on unpaid medical bills through garnishment of your wages.
To obtain a wage garnishment, the medical provider or collection agency first has to get court approval, which usually starts with a court proceeding that you’ll be notified of well in advance via certified letter.
It’s pretty hard to miss when a creditor plans to sue you unless you’ve moved since the medical procedure, so don’t ignore certified letters about your medical bills—it could be your only chance to state your case in front of a judge about the validity of the medical debt. If you simply don’t show up to the court date, the judge will award what’s called a default judgment to the medical creditor, opening the door for them to legally garnish your wages.
Is Bankruptcy The Only Way Out Of Medical Collections?
Chapter 7 bankruptcy can potentially wipe out all of your medical debts plus other debts that qualify. While this sounds great, not everyone qualifies for a Chapter 7 bankruptcy. To qualify, your disposable income must be low enough to pass the financial means test for the court. The biggest downside to Chapter 7 is you’ll sometimes be required to sell off assets to help repay creditors.
If you can’t qualify for Chapter 7 Bankruptcy, you may still qualify for Chapter 13 Bankruptcy, which creates a payment plan to pay off all of the creditors included in the process. Once all of your debt, income, and assets have been accounted for, Chapter 13 Bankruptcy creates a court-mandated repayment plan with monthly installments that don’t exceed 15% of your disposable income.
Of course, the most significant downside to using bankruptcy to escape from heavy medical collection debts is how long the negative impact on your credit will last. For Chapter 7 Bankruptcy, your credit will be impacted for ten years. With Chapter 13 bankruptcy, this drops to five years, but remember you’ll still be paying on those debts that whole time.
Luckily, bankruptcy is NOT the only option you have available to get debt relief from medical debts. Debt settlement may be an option, which has a far shorter and significantly less impact on your credit than bankruptcy does.
Can Debt Settlement Help You Pay Off Medical Collections?
If you’ve found yourself facing medical collections, you won’t necessarily be limited to bankruptcy if you can’t pay the medical debt. Often, debt settlement is a viable option to bankruptcy that has much less of an impact on your financial future. Debt settlement help from Alleviate Financial could help you reduce your medical collections debt balances. Our expert debt negotiators will deal with your medical creditors on your behalf, helping you get the best possible settlement.
How Else Can You Get Debt Relief From Medical Bills?
Debt relief programs from Alleviate Financial can help you settle your medical bills in a lump sum or payment plan, sometimes for far less than the balance your creditors claim you owe. Our team of expert negotiators will help put a stop to medical debt collection calls and letters. Then, we will help you get the best possible relief from your medical debt so you can move on with your life. Contact Alleviate Financial today to learn what medical debt relief you qualify for.