The Impact of Unpaid Medical Bills

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Medical emergencies and other health problems often put life into perspective very quickly for people. Money is generally an afterthought until the bills come due. Unfortunately, those medical bills can quickly cause long-term financial heartache that is difficult to cure.

The economic downturn has made paying health care costs that much harder. Unfortunately, unpaid medical billscan be sent to collections agencies in as few as 30 days. The agencies generally pursue the patient, even if their insurance company refused to pay on a valid claim. This is not an isolated issue as a recent study estimated that collections agencies contacted 30 million Americans about medical debts in 2010, an increase of 8 million since 2005.

Impact on Credit Score

What many people do not know is that unpaid medical bills are also reported to the credit bureaus. In fact, medical debt is often reported faster than other types of debt. The delinquency can reduce a credit score by as much as 100 points and remain on a credit report for up to seven years, even if the bill is paid in full. The biggest impact is difficultly securing credit. Even if credit is secured, a person will pay thousands of dollars more because of higher interest rates.

Relief Options

If unpaid medical bills have not yet been sent to a collection agency, the debtor may be able to work out a payment or debt reduction plan directly with the hospital or doctor. However, should such attempts prove unworkable, bankruptcy may be a viable option. A Chapter 7 bankruptcy filing would eliminate medical debt while Chapter 13 bankruptcy allows for consolidation of debts with a structured repayment program.

If you or a loved one has unpaid medical debt that threatens to impact their credit, contact an experienced debt relief attorney immediately to discuss your situation and your options.

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