Finance

What Happens If You Can’t Pay Medical Bills?

March 16, 2023

After an emergency surgery or unexpected trip to the hospital, you may be on the line for expensive medical bills. So, what happens if you can’t pay medical bills?

Unfortunately, medical treatment debt is more common than you may think. According to the US Census Bureau, nearly one in five Americans can’t afford to pay for their medical care right away.¹ If you’re one of these individuals, you may incur significant amounts of medical debt that you don’t know how to pay off.

Below, we’ll discuss the credit implications of having medical debt. We’ll also break down what happens when your medical bills get sent to collections.

Does Not Paying Medical Bills Affect Your Credit Score?

If you’re struggling with paying medical expenses, you may wonder, “Does medical debt affect credit score?” Unpaid medical bills can only affect your credit once they’ve been sent to a collections agency. The reason? Collection agencies report to credit bureaus, but healthcare providers do not.

However, not all unpaid medical bills can harm your credit. On July 1, 2022, the following changes took effect:²

Unpaid medical debt only shows up on your credit report once it’s been delinquent for at least a year. As a result, you have more time to negotiate your bills with your healthcare providers and arrange for adequate insurance compensation.
Medical debt collection accounts fall off your credit report as soon as you pay them, rather than sticking around for the standard seven years.
Starting in 2023, the credit bureaus will also stop reporting any medical debt collection accounts with balances under $500.

Thanks to these changes, medical debt won’t harm your credit quite as much as it used to.

What Happens When Medical Bills Go to Collections?

If your healthcare provider has been trying to get you to pay your bills to no avail, they may decide to cut their losses and sell your debt to a collections agency instead.

Once a debt collections agency gets involved, they may start requesting payment from you by phone, mail, or even social media. If you still can’t afford your hospital bill debt, it can be quite stressful to be contacted regularly by debt collectors.

What Else Can Happen if You Don’t Pay Your Medical Bills?

If you don’t negotiate a settlement with the debt collection agency, they may decide to sue you at some point. If so, you’ll have to go to court. If you lose the case, you could have your wages garnished or your bank account levied to recoup the remaining amount.

Should I Pay Off a Medical Bill in Collections?

While the worst-case scenarios take time to materialize, you shouldn’t wait when it comes to unpaid medical collection debt. You can learn how to get rid of medical debt and put a stop to the debt collectors and get the collection account removed from your credit report with the right financial strategy.

Here are some tips to make paying your medical expenses in collections more affordable:

Review your medical bills for accuracy – Medical bills are not law. In fact, some studies estimate that up to 80% of medical bills contain errors.³ While many of these errors are clerical, some of them may be inflating the total amount you owe. What’s worse, others may be attributing debt to your name that doesn’t even belong to you. To avoid overpaying, review each charge within your bill and make sure it accurately reflects the services you received. Simply reviewing your medical bills for these errors can reduce your total balance considerably.
Negotiate your balance – Debt collectors are often willing to accept a partial payment over no payment at all. With this in mind, you can always try to negotiate your balance down to a more affordable amount. Just let your debt collector know about your financial constraints and see if you can settle on a number that works for you both.
Look into financial assistance programs – If you’re struggling to afford your medical expenses, you may be eligible for financial assistance from local nonprofits or government programs. If you’re an older individual or a veteran, you have even more assistance programs at your disposal.

File for bankruptcy – As a last resort, if your medical debt is out of control, you may want to file for bankruptcy. Just keep in mind that bankruptcy can wreak havoc on your credit for up to ten years.⁴ In turn, it should only be used if there is no other option.

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