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Medical debt is financially and emotionally tasking; more so than most other types of debt, but there are ways to manage it before it gets out of hand. All you need is the right attitude and the relevant information to work your way right through it.
Medical debt almost always follows an unexpected injury or illness, and bills can be overwhelming when you’re trying to focus on your health. Even if you have health insurance, a brief stay in a hospital can leave you with large and burdensome bills. Chronic or serious health conditions can wipe out your savings swiftly and put you in debt for years to come.
In addition, legal complications resulting from medical debt can severely the financial well-being of your family. Medical debt is fast becoming one of the leading causes of consumer.
But if you’re in medical debt, you’re far from alone. One study found 40 percent of American adults have had problems repaying medical debts.
Dealing with Medical bills
When tackling medical debts, you may have to deal not only with doctors and hospitals, but also with your health insurance company and even an army of debt collectors. Some medical establishments are quite aggressive about collecting debts and may even sue you or try to convince you that you can’t seek further medical treatment if you owe them money.
When you receive your bill, you must first make sure it’s accurate. Look for overcharges, or charges for care and services you didn’t receive. If you find any errors, contact the billing office to have them fixed promptly.
Remember that your bill may be negotiable. Speak with your services to try to work out a lower total; your provider may be able to cut fees, for example.
You can also try to work out a payment plan with your doctor or hospital. In a way, you’ll be agreeing to make on an unsecured debt just like credit card debt. You’ll be responsible for monthly payments of a certain amount, and you may be charged predetermined fees of interest.
How can medical bills damage your credit?
Many patients don’t realize how easy it is fir a medical bill to damage their credit. They don’t understand that:
- Even if you are making payments on a medical bill, it may be sent to collections. (It’s a common misconception that if you pay something, they can’t send the debt to a collection agency. That’s not true.)
- Medical bills sometimes turn up in collections before the patient even gets a bill. At that point, the damage may have been done.
- Collection accounts are usually damaging, regardless of whether they are medically related. (More on this in a moment)
- Paying the collection agency may not fix your credit. In most cases, those accounts are reported for 7.5 years and are not often very damaging – paid or unpaid. (See the caveats below)
- The size of the debt is not as important as the status of the debt. In other words even a relatively small bill that winds up with a bill collector can harm your credit scores.
It is critical that you review your credit reports annually and monitor your credit scores on a regular basis. (Think of it as a checkup for your credit health) you can get a free credit report summary and score, update monthly, at Credit.com. One survey by Credit.com found that 10%of those who reviewed their credit reports discovered a collection account they didn’t know about.
Will a Medical debt in collections Really Hurt My Scores?
You have many different credit scores, not just a single one. (Even among FICO scores, there are many different versions.) The newest version of the FICO score, FICO 9 — ignores paid collection accounts, and medical collection accounts carry less weight under that model. Vantage score 3 also ignores paid collection accounts of all types.
But most lenders still use older versions of credit that do not give medical collections any special treatment. For that reason, you should assume that if you find a collection account on your credit report, it will likely be viewed negatively when you apply for credit, insurance or employment.
So what can you do?
Before one of this bill winds up in collections, to the extent possible, try to be very proactive about your medical bills. Even if you have good health insurance, don’t assume everything will be taken care of. Review your EOBs (Explanation of Benefits) carefully and contact the provider and/or your insurance company quickly if it’s not being taken care of.
If you are contacted by a collection agency about a medical bill, ask them not to report it if you pay it right away (assuming you believe you owe the bill). Some won’t report the bill is resolved quickly.
Again: Having a collection account updated as “paid” generally does not help your scores, unless a lender is using one of the newer credit score versions. So aim for removal of the item if possible. Some agencies will work with you, others won’t.
When you feel unfairly treated
If you feel the situation is highly unfair — you never got the copy of the bill, for example — you can try two things. One is to file a complaint with the Consumer Financial Bureau. The other is to contact the original provider and try to get them you pull it back from collections so you can pay them directly. If they do, the accounts will usually no longer be reported.
If you are contacted by a collection agency and you don’t believe you owe the bill, you have the right under the federal Fair Debt Collection Practices Act to ask the collection agency to validate the debt. You also have the right under the Fair Credit Reporting Act to dispute with the credit reporting agencies reporting the account.
First things first: don’t get discourage. It would be easy to stash away your medical bills in a drawer, or sit them far back on a shelf to collect dust, but the fact is that these bills won’t disappear. And most importantly, you are much, much more likely to receive financial assistance if you work with the provider before the bill is sent to a collection agency.
Luckily, there are many steps that you can take to help your situation and potentially even lower your outstanding bills!
Set up a payment plan
Regardless if you were able to negotiate a longer overall balance or not; providers know that a huge medical bill broken down into small, manageable payment is much more likely to be paid off; so call the provider and ask if they can set up an interest free payment plan. It’s important to speak to the right person and let them know of your situation; and that you’re trying to pay off your debt but lack the income to do so right away.
Tip: Keep in mind that someone who is simply sympathetic to your situation can’t help you – be sure to speak to someone higher up in the billing department directly for the most assistance.
The bottom line is that medical emergencies are never planned, but are always costly. Lucky for you, there are countless resources are available to help you negotiate and even lower your bill; as well as ET up payment plans. Don’t let your bills overwhelm you. As dim as the situation may seem, you can work your way out of it![contact-form][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Website’ type=’url’/][contact-field label=’Comment’ type=’textarea’ required=’1’/][/contact-form]