Can You Get in Trouble for Not Paying Medical Bills? Know the Risks

Not paying medical bills can have serious consequences. A collections agency can sue you for the debt, which can lead to a judgment against you.

If a collections agency sues you and wins, the court can grant a judgment against you, allowing the creditor to garnish your wages, bank accounts, or even seize your assets.

Ignoring medical bills can also damage your credit score, making it harder to get approved for loans or credit in the future.

A single medical bill can remain on your credit report for up to seven years, affecting your credit score and making it harder to get approved for loans or credit.

Almost 32% of employed Americans have medical debt, and more than half of them have defaulted on it.

Not paying your medical bills can lead to a series of consequences, including having a debt collector contact you to collect the receivable amount on behalf of the healthcare provider.

You can expect your credit score to drop once the unpaid debt becomes part of your credit history, which typically happens after a 180-day waiting period.

The collection agency will report your unpaid balance to the major credit bureaus, including Experian, TransUnion, and Equifax, causing your credit score to drop.

You may have trouble acquiring a new credit card or line of credit, and you won't qualify for the lowest interest rates, problems that can continue for seven years.

The consequences of a lower credit score can be far-reaching and may take a toll on your financial stability for an extended period.

If you're struggling to pay your medical bills, it's essential to understand the potential consequences of not paying. You can save hundreds or even thousands of dollars by hiring a medical bill advocate who can review, analyze, and appeal your bills.

Late fees and interest charges can substantially increase your medical debt over time. For example, an 8% interest rate on a $20,000 bill can add about $133 to your balance each month and $1,600 each year.

To avoid these extra charges, review your documents carefully and understand your healthcare provider's late payment policy. If you've already agreed to the policy, you can still use it as a negotiating point to work out a payment plan.

Late fees and interest can quickly add up, increasing the amount you owe on your medical bill. An 8% interest rate on a $20,000 bill, for example, adds about $133 to your balance each month and $1,600 each year.

You can try to understand how much you could be charged in interest and fees by reviewing every document you signed before you were treated. This usually includes the fine print of your onboarding documentation, where healthcare providers disclose how they handle unpaid balances.

Unfortunately, if you find the late payment policy on a document you've already signed, you've already agreed to the late fees and interest charges.

Insurance coverage is not a guarantee of paying every penny of a major medical expense. With rare exceptions, it doesn't.

It's a major mistake to assume insurance will cover every medical cost, so it's essential to study and understand your coverage. Ask for an Explanation of Benefits (EOB) to clarify what your insurance company will pay and what you're expected to pay.

The Healthcare Bluebook is an online service that allows consumers to gauge a fair price on medical procedures based on where you live. This can help you make informed decisions about your care.

If your income qualifies you for a hospital's financial assistance policy, also known as charity care, your bills could be reduced significantly or forgiven completely. Nonprofit hospitals are required by law to have these programs in place.

Using important terms like "chargemaster rate" can help you negotiate the price of a procedure. The chargemaster rate is the full cost hospitals use with insurance companies, which is often reduced.

Communicate with your medical providers about your situation and they may offer no-interest or low-interest payment plans to make debt repayment easier. Many hospitals, physicians, and dentists can provide these options.

You can negotiate with them to waive billing charges or any fees on your medical bills to make them more affordable. This can be a big help if you're struggling to pay your bills.

If you have low income, high medical bills, or are facing financial hardship, you may qualify for financial assistance through your healthcare provider's income-driven hardship plans. These plans can be a lifesaver.

Don't be afraid to ask about these options and discuss how much you can afford as monthly payments. Your provider wants to work with you to find a solution.

You can also ask if you qualify for the "financial assistance policy", also called "charity care." Nonprofit hospitals are required by law to have these programs in place.

Using credit cards to pay medical bills can be tempting, but it's essential to consider the risks. Credit cards charge high interest rates, which can quickly add up and make the debt even harder to pay off.

Medical debts rarely charge any interest, making them a more manageable option. Try to work out a payment plan with the medical provider instead of using a credit card.

If you do decide to use a credit card, make sure you can pay the bill promptly to avoid accumulating interest. If you can't pay the credit card bill on time, discuss whether the medical provider might offer an interest-free payment plan.

You can recover from medical collections, but it won't be easy. The steps you take to improve your credit score in the wake of medical collections aren't quick, but they're worth taking.

The first priority is to pay off the medical debt that's been sent to collections. This is what's dragging your credit score down. Paying it off first will help you start rebuilding your credit.

Next, pay off any other past-due debts, including credit card debt. While other kinds of debt can do more damage to your credit score, dealing with them first will help prevent further damage.

Making all your payments on time is crucial. The credit bureaus reward your score when you show them you can do this. Your payment history makes up 35% of your credit score.

To further improve your credit score, focus on paying down your credit card balances. This will help you achieve a low credit utilization ratio, which shows the credit bureaus how well you manage your debt.

Here's a summary of the steps to rebuild your credit:

If you have a verifiable hardship, such as a disability that prevents you from working, you may be able to seek medical bill forgiveness by petitioning the provider to forgive the debt entirely. You'll need to provide proof, including tax returns and written documentation, to show you have no means to pay your medical bills.

You can also apply to nonprofit organizations such as the PAN Foundation and CancerCare for help with your medical bills. These organizations can provide assistance with medical bills, making it easier to manage your debt.

Using a normal credit card for medical debt is the last resort of last resorts, so it's essential to explore other options first. If you're unable to pay your medical bills, you can seek medical debt relief through various means.

Having large, outstanding medical bills can be stressful and distressing, but there are alternative options available to tackle your debt. You can explore these options to find the best solution for your situation.

The No Surprises Act was introduced in 2020 and took effect on January 1, 2022, to protect people against unexpected gaps in insurance coverage and surprise medical bills.

The law makes it possible to get an up-front, good-faith cost estimate before treatment, and it's easier to dispute unexpected charges on medical bills.

Even if you're uninsured, the NSA can help alleviate unlawful medical debt collections.

If you're at risk of legal action, it's best to consult a wage garnishment lawyer as soon as possible.

Here are some key facts to know about government regulations and protections:

The No Surprises Act was introduced by Congress in 2020 to protect people against unexpected gaps in insurance coverage and surprise medical bills. It took effect on January 1, 2022.

This law was inspired by the story of a Colorado man who received a $80,232 hospital bill for an appendectomy and follow-up surgery, despite not having health insurance. His bill was eventually reduced to $22,304 after months of negotiations.

The No Surprises Act makes it possible for people to get an up-front, good-faith cost estimate before treatment, regardless of their insurance status. This is a major step forward in alleviating unlawful medical debt collections.

The proposed regulations for the No Surprises Act are still pending and won't be decided until 2024 at the earliest.

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects consumers from abusive and harassing debt collection tactics. It applies only to collectors working for professional debt collection agencies and attorneys hired to collect a debt.

This law prohibits collectors from calling you at work if they know your employer doesn't permit such calls, and from making calls before 8:00 a.m. or after 9:00 p.m. unless they know it's more convenient for you. It also prohibits unfair or unconscionable means to collect a debt, as well as any conduct to harass, oppress, or abuse.

If you're being subjected to harassing or abusive debt collection tactics, you can stop further contact by notifying the collector in writing. Keep a copy of your letter and send the original to the debt collector by certified mail.

Here are some specific examples of prohibited debt collection practices:

By knowing your rights under the FDCPA, you can protect yourself from abusive debt collection practices and ensure that you're treated fairly.

In the United States, laws regarding debt and jail time vary from state to state. If you reside in certain states, you can be at risk of jail time due to contempt of court, not directly because of owing a debt.

There are specific states where you can go to jail due to contempt of court, which is often a result of failing to appear in court or disobeying a court order. These states include Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Washington, and Wisconsin.

If you're at risk of legal action, it's essential to consult a wage garnishment lawyer to evaluate your options and understand the laws in your state. They can help you navigate the complex process and protect your rights.

If your medical bills are left unpaid, they can go to collections. This usually happens after 90 days or more, and you can expect repeated phone calls and letters from debt collectors.

Debt collectors are very good at being persistent, so it can be difficult to ignore them. The healthcare provider will likely send your account to a collection agency, which is a third-party organization that specializes in recovering debts.

The collection agency will take care of the matter on behalf of the healthcare provider, and they may call you to pressure you into paying your outstanding debt. You may receive a lot of debt collector calls, which can be very stressful.

Here are some things to know about debt collectors and the collection process:

If you're being subjected to harassing, abusive, or fraudulent debt collection tactics, you can notify the collector in writing and stop further contact with you. Keep a copy of your letter and send the original to the debt collector by certified mail.