Why Is Medical Debt So Challenging?
Medical debt is one of the most frustrating debts to deal with. Not only does nobody seek ways to get themselves into medical debt, but it’s also often a result of unclear billing or disputes with insurance companies about who’s responsible for the charges.
Beyond the frustrating and confusing nature of how medical debt arises, it can also be challenging to get relief from this type of debt. It’s not uncommon for medical debts to be sold multiple times to different collection agencies, making it difficult to determine who to contact to resolve the debt.
So what different types of medical debt are there, and what are the pitfalls of each to watch out for?
Types Of Medical Debt
When hospital stays turn into multiple days, the costs can escalate quickly, resulting in massive medical bills that you can’t afford. Sometimes the hospital will agree to work out a payment plan, but they’re often under no obligation to do so.
If you can’t raise funds to pay these medical bills, they will likely be sold to a medical debt collection agency, dropping your credit score and inflating the original balance with fees and interest charges.
Specialized Tests And Treatments
It can be confusing trying to sort out what you’re actually required to pay out of your pocket for testing and diagnostics performed by specialized providers. Sometimes bills can come from companies with unfamiliar names, and if you’ve had more than one test, it can be uncertain what you have to pay. If these bills go unpaid too long, they could end up being sent to a medical collection agency.
Air Ambulance Services
When you’ve been involved in a serious car crash, there’s a chance you may have needed air ambulance services, which for a 50-mile trip, averages between $12,000 and $25,000 per flight. Needless to say, if your insurance doesn’t fully cover this cost or you’re uninsured, the bill for these services can be shocking to a family’s finances.
Medical Collection Agency Debts
If you go too long without paying a medical bill, it may wind up being sold to a medical collection agency for pennies on the dollar. The good news is because collection agencies buy medical debts so cheaply, there’s a strong chance you can get a significant reduction to settle your medical debt and alleviate your financial worries.
What Could Happen If You Don’t Pay Your Medical Debts?
If you can’t afford to pay your medical debts, the severity of the negative consequences will depend on who owns your medical debt. Is the medical debt simply a past-due bill owed to the original medical service provider? If so, you may be able to restructure your payment plan and get back on track.
Medical service providers would much rather collect as close to the full amount for the services they provided as they can—selling to a debt collector is not their first choice. In this situation, your best approach is to call them to work out a revised payment plan to get back on track.
Once your medical debt is held by a medical debt collector, the first step is requesting the medical debt be validated in writing by the collection agency. If properly validated, there are a variety of methods to resolve the medical debt.
Medical Debt Relief Methods
Non-Bankruptcy Methods For Medical Debt Relief
Fortunately, bankruptcy isn’t the only method for alleviating your medical debt. Numerous alternatives to bankruptcy may be available depending on your financial scenario. There’s a chance you can significantly slash your medical bill balances without taking the credit hit that bankruptcy causes. What are the alternatives to bankruptcy for getting medical debt relief?
Medical Debt Consolidation Programs
Are you struggling to get ahead financially because of high medical debt payments every month? If so, medical debt consolidation might be a method for you to drastically cut your monthly medical debt payments. This takes all of your medical debt and combines it into one predictable monthly payment.
A major merit of medical debt consolidation is the way you are charged for interest. With medical debt consolidation, you’re only charged simple interest, along with a single monthly payment rather than stacks of bills to worry about paying on time. Medical debt consolidation is only one alternative to bankruptcy offered by Alleviate Financial. A settlement may also be an option for you.
Medical Bill Debt Settlements
Medical debt settlement is largely about negotiating with your medical debt collection agencies or healthcare billing departments to drastically cut your medical debt balances.
Aside from potentially saving you thousands of dollars, a key benefit to utilizing medical debt settlement is that it won’t drag your credit score down as severely as bankruptcy will. Of course, this depends on your current credit situation and if the medical debt is already listed on your credit report.
Filing Bankruptcy To Get Medical Debt Relief
When you’re already struggling financially, medical bills for thousands of dollars can make it seem like bankruptcy is the only way to turn things around and get some breathing room in your budget. While the allure of a clean slate is strong, this option isn’t for everyone.
Aside from the many significant downsides to bankruptcy, not everyone qualifies for every type of bankruptcy, and some types still require you to repay your debts rather than clearing them completely. Let’s cover the types of bankruptcy and the considerations of each.
Types Of Medical Debt Bankruptcies
Chapter 7 Bankruptcy For Medical Debt
Chapter 7 bankruptcy wipes all of your medical debt clean and possibly many of your other qualifying debts like credit cards and collections. That said, this option isn’t available to all—income qualification is required.
The negative consequences of Chapter 7 are severe. For starters, the court can order you to sell off assets like cars, boats, or personal possessions to repay creditors. What’s worse, Chapter 7 bankruptcy can stay on your credit report for up to ten years, making it difficult to reestablish your financial life.
Chapter 13 Bankruptcy For Medical Debt
Chapter 13 bankruptcy establishes a repayment plan to slowly pay off your creditors. These plans have a single payment that usually spans five years. With Chapter 13, the court calculates every aspect of your financial situation to set the payment amount, limited to 15% of your disposable income.
One good side to Chapter 13 is that it only stays on your credit reports for five years, rather than the ten years Chapter 7 remains on credit reports. Still, five years is nothing to treat lightly, so weigh your options carefully.
Get Medical Debt Relief And A Brighter Future
Alleviate Financial has medical debt relief specialists ready to help remedy your stressful financial situation. After gathering all the details of your medical debt and financial circumstances, we will create a strategy for medical debt freedom in the shortest time possible.
We work hard every day to end medical debt harassment for our clients. Are you ready to get started on getting medical debt relief? Contact Alleviate Financial today!