It only takes one major medical emergency to set a person back thousands of dollars, even with adequate health insurance coverage. This is why medical debt is one of the largest categories of unsecured debt discharged in bankruptcy.
Many consumers resort to solutions such as paying medical expenses with credit cards or taking out personal loans to pay them off, but many times, these solutions only put them in more financial distress.
One in every five Americans are struggling with medical debt for a combined total of $140 billion in past due medical bills. However, unlike most unsecured debt, medical debt has a lower interest rate. Additionally, if the consumer stops paying on medical debt, and the debt goes to collections, it will not immediately ruin that person’s credit score. The three major credit-reporting bureaus offer a 180-day grace period before including delinquent medical debt on credit reports. This is meant to either give insurance enough time to process the claim or to allow the consumer more time to pay off the debt.
Additionally, since medical debt is something that a lot of people struggle with, credit scoring models tend to treat this category of debt less harshly than others. However, it is important to pay off the debt as soon as the consumer can to avoid adding a delinquent account to his or her credit report.
Refinancing the debt by paying it off with a personal loan, line of credit, or credit card, is often used by consumers to eliminate the debt quickly. However, refinancing does not mean the debt goes away. It simply goes from one form to another. Many times, the consumer loses the protections offered under the original medical debt by paying it off with an unsecured personal loan. It can also draw out the debt over a longer period, leaving the consumer stuck with it for years.
Alternatively, it can often be more beneficial to simply reach out to the medical provider and ask for financial assistance. Many times, providers are happy to work directly with the patient to help negotiate a payment plan regarding the outstanding balance. They would much rather resort to this option that pursue a medical debt in collections. These plans can allow the patient to break the balance down into smaller, more manageable amounts that are paid over a certain period.
The Affordable Care Act (ACA) specifically requires certain nonprofit hospitals to provide this type of financial assistance to lower-income patients. The ACA does not spell out what type of assistance this may be, but it normally involves discounts ranging between 10 percent to 100 percent off.
Before making any payments, it helps to closely examine the medical bill to ensure that all information regarding the dates and treatments received is correct. Medical billers do occasionally make mistakes, which could lead to the consumer paying more than he or she should. Compare the charged amount with what shows up on the consumer’s insurance statement. It is possible that errors or unauthorized charges may appear. If that is the case, the consumer should immediately contact the medical provider to have these issues fixed and a new billing statement issued.
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Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken, P.A. website at www.miamibankruptcy.com.
