Like other types of debt, unpaid medical bills can stay on your credit report for up to seven years. It can affect your ability to take out loans, finance a home or car, and qualify for credit.
If you can resolve medical debt quickly or keep it below $500, it may never show up on your credit report. Paid medical debt, medical debts under $500, and unpaid debts less than one year old are no longer reported by the three major credit bureaus.
Here are some ways to get rid of medical debt.
- Review your bill carefully. Request an itemized bill and check for errors. Make sure the charges are accurate, that you were not billed twice, and your insurance benefits were applied.
- Request a payment plan. Hospitals and doctors’ offices often offer payment plans and may work with you to set an affordable monthly amount. These plans are often interest-free and can help keep your account out of
- Negotiate the bill. Hospitals will sometimes allow you to negotiate a lower balance. This can apply when you either pay in full or within a certain period.
- Explore financial assistance options. Some hospitals offer financial assistance programs that can significantly discount or entirely waive medical bills for qualifying patients. You may qualify for reduced or free care based on your household income, especially if you are uninsured or underinsured. These policies usually apply to medically necessary care, with eligibility determined on a sliding scale based on the Federal Poverty Level.
Here’s what to do if your medical debt is already in collections.
- Confirm the debt is valid. You have the right to request a debt validation letter from the collection agency. Review it to confirm the amount is correct and that your insurance was If the agency cannot verify the debt, you can dispute it with the credit bureaus.
- Check if the debt will be recorded. Medical debt under $500, or less than a year old, should not appear on your credit reports. If they do, you can file a dispute with the credit bureaus to have it removed.
- Reduce the balance. Even if you cannot pay the full amount, lowering the debt below $500 may help remove it from your credit report. Once you pay it down, ask the collection agency to update your credit report.
How Bankruptcy Treats Medical Debt
In bankruptcy, medical debt is treated the same as credit card debt. Medical bills are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing. Making the decision to file for bankruptcy is never an easy one.
Fortunately, consumers have the option available to them to file for bankruptcy to escape this burden of medical debt. In a bankruptcy case, debts are classified into two categories: secured and unsecured, as well as priority and nonpriority debts. Secured debts are those that are backed by a form of collateral, while priority debts can be unsecured but receive special status, such as tax bills, student loans, and child support. Unsecured debts are those debts that are not secured by collateral and include personal loans, credit card debt, and medical debt.
In a bankruptcy case, unsecured debts are the ones that are discharged at the end of the case, while priority and secured debts are the focus of payment plans or payment in a Chapter 7 case after assets are liquidated. If a debt is discharged, this means the court has issued an order stating that the debt does not have to be paid.
Medical debt may also become part of the repayment plan issued as part of a Chapter 13 bankruptcy case. The bills may not end up paid in full, but the medical providers will receive at least some amount of payment, which helps the consumer maintain a relationship with their healthcare providers. Repayment plans normally last three to five years, ending with the consumer’s remaining debts, including medical debt, getting discharged.
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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 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.