What Happens If You Are Unable To Pay Your Medical Bills?
A 2019 research study published by the Journal of General Internal Medicine found that 137.1 million Americans experienced “financial hardship” during the past year. This is a staggering number and something to keep in mind if happens you are currently dealing with unpaid medical bills. High hospital debt can cause stress in many people, and it can also lead to serious consequences if not dealt with.
The Consequences Of Unpaid Medical Bills
You can’t decline medical treatment if you are injured or become sick. You are not concerned about your checking account balance or the credit limit. Your primary concern is getting better as soon as you can. You may not realize it until you’re better, but then you might start to question the cost of your care.
How much will it cost me? What role does my insurance play in this? Are some of these procedures mandatory? Do I need to leave the hospital before my bills are due? What if my hospital bill is unpaid?
This is the easiest question to answer. It is easy to predict the consequences of not paying your medical bills. If you ignore your bills, you will likely experience the following five outcomes.
1.) Late fees and interest
Your healthcare provider may start to press you to pay your medical debt. They will add late fees or interest to your balance if allowed by your state. These additional charges could increase your owe significantly over time. For example, a $20,000 bill with an 8% interest rate adds $133 each month to your balance and $1,600 annually.
You can determine how much interest and fees you might be charged by reviewing every document you signed before being treated. Healthcare providers must disclose how they deal with unpaid balances. This information can be found in the fine print of your paperwork.
If you see the late payment policy on any document you sign, it means that you have already signed up for the late fees or interest. These extra fees can be negotiated if you contact the provider to try and work out a payment plan.
2.) Debt collectors
The healthcare provider will most likely send your account to an agency if the balance is not paid within a specified time frame, usually for at least 90 days. You can expect to receive repeated phone calls and letters from the debt collector at that point. It is possible to ignore the outreach efforts, but this will not work because debt collectors are persistent.
3.) Credit damage
The collection agency will report the unpaid balance to major credit bureaus. These bureaus include Equifax, TransUnion, and Experian. Each bureau has a 180-day waiting period before the medical debt is added to your credit report.
Your credit score will fall once the waiting period, and the due credit becomes part of your credit history. A lower credit score can have serious consequences. A lower credit score can make it difficult to obtain a new credit card or line of credit. You won’t be eligible for the lowest interest rates. These problems will persist for seven years. This is how long the issue will be on your credit file.
If you don’t pay the collection agency, you can be sued. The ultimate goal of the provider is suing is to get a judgment from the courts. After that, the provider will use more aggressive collection strategies like bank account levies, wage garnishments, and liens.
Liens, Wage Garnishments, And Levies
A lien is a claim on your property made by a creditor. Creditors will often seek liens against your house. Creditors can pursue liens against your home, which gives them the right to be repaid with the proceeds from the sale of the property. Refinance may be difficult if there is a lien.
Wage garnishment refers to the legal withholding from your wages to pay off the unpaid debt. Wage garnishments are limited to 25% of your after-tax income by the federal government, but even that can cause serious financial problems for your household.
The bank account levy, which is the most severe action that a creditor could take, is the most serious. The levy is essentially monetary extortion that a creditor applies to your account. All funds that you have in the bank can be taken. A levy can quickly increase your financial problems.
How Can I Get Help With My Unpaid Medical bills?
What happens if you can’t pay your medical bills? It’s mostly bad stuff. The more you delay in addressing medical debt, the worse the consequences will be. It’s easy to try to hide the debt and hope that it will go away. But this is not a wise strategy. Instead of worrying about not paying, it’s better to ask a different question: Where can I get help with my medical bills? Because, no matter your financial situation, there are realistic ways you can reduce your medical debt. Here are six.
1.) Ask for a payment plan and review the charges
The first thing you should do is go through all bills and confirm that the charges are correct. Take a list of all your questions and contact your healthcare provider. To make sure you are comfortable with the balance, ask your questions first. Next, describe your situation and ask for a reduction or waiver of charges. Finally, offer to pay over time. If possible, do this before your account goes to collection.
2.) Consolidate your medical debt
Low-rate debt can be helpful in paying healthcare bills if the provider disagrees with a reasonable payment plan. Low-rate debt can be obtained from home equity, life insurance loans, or borrowing from your 401(k). These options can have negative long-term financial consequences. Make sure you carefully weigh the pros and cons of each option.
3.) Life settlement
A life settlement involves the sale of your life insurance to third parties for a cash payment. A life settlement is an excellent alternative to taking on more debt to raise cash for your medical debt. Although you may lose your life insurance, it’s usually better than sacrificing your 401K balance or resetting the mortgage payment date for 30 years.
Green Day Online offers a free, no-obligation assessment of your life insurance.
4.) Crowdfunding is a great option
Crowdfunding has become a popular option in recent years. GoFundMe allows you to create a fundraising page and share it with your family and friends. They can often raise thousands of dollars through small donations from your network.
5.) Consider donating to a charity
You may be eligible for help from charities like PAN Foundation and HealthWell Foundation if you have a rare, life-threatening, or life-threatening disease. They are both based on the mission of helping underinsured patients receive the care they require.
Did you know that medical bills are the most frequent reason for bankruptcy? It’s true, unfortunately. Chapter 7 bankruptcy may be your answer if you are looking for a way to eliminate medical debt when you are certain you don’t possess the means to pay it.
A Chapter 7 bankruptcy will wipe out your healthcare debts and other general debts, such as credit card balances. However, there are some caveats. First, not everyone is eligible for Chapter 7 bankruptcy.
You must meet income requirements. The courts can also order the sale of some property to pay off the debt. Third, bankruptcy filings will remain on your credit report up to 10 years.
Another bankruptcy option is the Chapter 13 filing. This will give you some assistance with your medical bills through a court-ordered repayment plan. You pay off the healthcare-related debt along with any other unsecured debts over time.
It will still leave a permanent, serious blemish on credit reports, but it may be possible if you aren’t eligible for Chapter 7 bankruptcy.
Talk to an attorney about your options to determine if bankruptcy is the right option for you.
If You Don’t Pay Your Medical Bills
You could lose your credit score, garnished wages and liens, as well as the inability to maintain any money in your bank account if you fail to pay your medical bills. All of these things can make it difficult to live financially.
It is possible to avoid these outcomes by contacting your healthcare provider early to negotiate reduced charges and a payment schedule. Ask your family and friends for assistance as you look to liquidate assets such as life insurance. If all else fails, you can talk to a bankruptcy lawyer about your options.
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