Paying medical bills. How can DebtStoppers help you?
If you have unpaid medical bills and don’t know what to do – don’t panic, we can help. A bankruptcy attorney at Debtstoppers can help you eliminate or manage medical debt, protect you from collections, and guide you toward a fresh financial start.
Overview of the medical debt problem in the US
The United States has some of the most expensive healthcare costs in the world, even with insurance, many Americans accrue significant medical bills, especially for emergencies, surgeries, and treatments for chronic illnesses. Many insurance plans in America currently have high deductibles, narrow networks, and limited coverage, leaving people to pay large amounts out-of-pocket.
Nearly one-third of the US population has some form of medical debt. The median amount owed is ~$2,000, but it’s important to note that many people owe significantly more. For example, more than 16 million Americans owe more than $1,000 - while nearly 3 million people owe more than $10,000 in medical debt.
How do unpaid medical bills affect you?
People with medical debt are more likely to experience financial insecurity, stress, and hardship. Many Americans report delaying other payments, such as rent or mortgage, to manage medical bills.
Sometimes people delay or skip needed medical care to avoid taking on more debt, which can result in worse health outcomes. It’s important to continue to receive the healthcare you need, even if you are worried about unpaid medical bills.
Credit score
Medical debt can negatively affect credit scores, but it is important to know that medical debt is treated differently than other types of debt.
For example, if you miss a credit card payment, the creditor has the right to report that late payment to the credit bureaus once it is 30 days overdue. Medical debt, on the other hand, does not immediately impact your credit score unless the bill is more than $500, the bill is unpaid for more than one year, and the bill is sent to a collection agency.
It’s also important to understand that due to recent policy changes at the three major credit reporting bureaus, medical bills less than $500 will not show up on credit reports after going to collections and medical bills $500+ will not show up until one year after it goes to collections.
Psychological and mental consequences
Medical debt can lead to anxiety, depression, and stress, worsening a person’s overall health.
What are your options if you can't pay your medical bills?
If you’re struggling to pay your medical bills, several options to help manage or reduce your debt include negotiation, debt consolidation, and bankruptcy.
Negotiate
Many hospitals and medical providers have financial assistance programs for patients who can’t afford their bills. These programs can offer discounts, or even partial forgiveness, depending on your financial situation. You, or an attorney, may be able to negotiate directly with the billing department to explain your situation and negotiate a discount. Some providers offer reductions if you offer to pay a portion upfront or if you can provide documentation of your financial hardship.
Many medical providers will help you set up a payment plan that allows you to pay off your debt in smaller, more manageable installments over time. Payment plans vary by provider, so ask for specific terms to avoid penalties or fees.
It’s also important to know that medical bills sometimes contain errors or unnecessary charges. Requesting an itemized bill allows you to review each charge and dispute any errors, which can lower your bill and reduce your overall debt.
Debt consolidation
If you have multiple medical bills and a decent credit score, you may qualify for a personal loan with a lower interest rate. A personal loan can allow you to consolidate your debt into a single monthly payment, making it easier to manage.
Some companies offer credit cards specifically for medical expenses, which offer interest-free periods or low-interest options for qualified applicants. However, if you do not pay off the balance within the promotional period, interest rates on these cards are often high. Alternatively, you can consider using a balance transfer credit card with a low or 0% introductory rate to consolidate medical debt. This can be a good option if you have a solid credit score and can pay off the debt before the introductory period ends. After that, interest rates may increase significantly, so it’s wise to be cautious with this approach.
People who own their home might want to consider a home equity loan or line of credit (HELOC) to consolidate debt at a lower interest rate. However, this approach has risks because it turns unsecured medical debt into secured debt. If you can’t repay the loan, you risk losing your home.
Bankruptcy due to medical bills
Most people filing for bankruptcy due to medical bills use either Chapter 7 or Chapter 13. If medical debt is your primary debt, an experienced bankruptcy attorney can help you explore which option is most appropriate for your situation.
Chapter 7 bankruptcy discharges most unsecured debts, including medical bills. To qualify, you’ll need to pass a means test, which looks at your income and expenses. Chapter 7 is often the best option for those with little income and high medical debt, as it allows for a fresh start without requiring repayment. However, it stays on your credit report for 10 years and can impact your ability to secure loans or credit in the future.
If you have a steady income but can’t manage your medical debt, Chapter 13 allows you to set up a three to five-year repayment plan. During the repayment period, you’ll make monthly payments to a trustee who distributes the funds to your creditors. At the end of the plan, any remaining medical debt may be discharged. Chapter 13 stays on your credit report for seven years and requires a repayment plan based on your income and expenses.
How can DebtStoppers help you with your medical bills?
A bankruptcy attorney at DebtStoppers can provide valuable assistance if you’re struggling with overwhelming medical bills.
Medical debt can be overwhelming but the expert bankruptcy attorneys at Debtstoppers can provide guidance throughout the process. Knowing you have a professional to help you manage your debt and navigate the legal system can reduce stress and allow you to focus on moving forward.
First, we will evaluate your financial situation to understand your medical debt, and help determine if bankruptcy is the best option for your situation. If bankruptcy is a good option, an experienced attorney at DebtStoppers will help you determine if Chapter 7 or Chapter 13 bankruptcy is a better fit.
DebtStoppers can help you every step of the way. Once you file for bankruptcy, an automatic stay goes into effect, which prevents creditors from pursuing collection actions, such as wage garnishment, lawsuits, or harassment.
Bankruptcy requires extensive paperwork and financial documentation, and errors can delay or complicate the process. Debstoppers will help ensure all documentation is correctly completed and filed on time. Your attorney will represent you in bankruptcy court, advocating for you in meetings with creditors, trustees, and any court hearings, which can provide you with peace of mind.
Additionally, the team at DebtStoppers can advise you on steps to take after bankruptcy, such as budgeting, credit rebuilding, and avoiding further debt, to help you regain financial stability. They can explain the effects of bankruptcy on your credit report and help you get a fresh financial start.
