Unpaid medical bills can have a devastating affect on one's credit score that can linger long after the bills are paid. This causes serious short-term problems for people seeking jobs and apartments, fueling stress and anxiety.
Medical bills can also contribute significantly to bankruptcy. A 2009 Harvard University study concluded that medical bills and related issues fueled 62 percent of all bankruptcies filed in 2007. Of those filers, around 78 percent had health insurance.
Collecting Debt From Low-Income Patients
For some hospitals, low-income patients account for as much as 80 percent of unpaid medical bills. The Internal Revenue Service (IRS) asked hospitals to estimate the amount of those bills that would qualify for free or discounted treatment. The estimate was in the millions of dollars, which shows a disconnect between hospital financial aid programs and patients in need.
These outstanding medical bills, which could be resolved with income-based reductions and payment plans, are compounding credit problems for low-income individuals already struggling to survive.
Enter Collections Agencies
Unfortunately, hospitals are quick to sell unpaid bills to collections agencies at a fraction of their value. Even if a collection agency does not actively try to collect on a bill, the agency often reports even small amounts to credit reporting agencies. Patients may not even know the bill exists until it has negatively affected their credit report.
Get Help From a Bankruptcy Attorney
When income-based reductions and payment plans are not enough, bankruptcy may be a smart approach to getting a fresh start. Chapter 7 bankruptcy eliminates most consumer debt and Chapter 13 bankruptcy offers debt consolidation with low monthly payments.
If your unpaid medical bills are negatively affecting your credit, contact an experienced Florida bankruptcy attorney at our firm to discuss your situation and your options.
