5 important facts about medical debt

Category: Healthcare

Aside from credit card debt, unpaid medical bills are another leading cause of consumer debt. Even with health insurance, it can be easy to accumulate hundreds (or thousands) of dollars in medical debt, especially if ongoing care or hospital admittance is required. Knowing more about medical bills and debunking some common medical myths can allow you to build a more effective plan for repaying that debt.

Myth #1: There is no purpose in paying a medical bill that has already been handed over to a debt collector, because the damage to my credit score is already done.

Fact: While you may not see a big improvement in your credit score after paying it, you can prevent other serious consequences. Unpaid debt of any kind, including medical debt, can result in a judgment against you and your wages could be garnished. To avoid this, always take care of medical debt if you can, no matter how late you are and regardless of whether it’s been handed over to a debt collector.

Myth #2: As long as I pay a little bit of my medical bill, it won’t be sent to a debt collector.


Fact: Every medical bill has its own payment terms, which you may or may not be able to work out with your doctor’s office. Some medical bills must be paid in full by a certain deadline, whereas others may allow for small payments to be made, but also by a specific deadline. Either way, if you don’t pay the amount that you owe and by the specified payment deadline, you run the risk of the bill being sent to a collection agency.


Myth #3: Unpaid medical bills won’t affect my credit the same way other unpaid bills would.


Fact: Once an unpaid bill is sent to a debt collector, it doesn’t matter what type of debt it is for, your credit is affected just the same. Your credit might be affected more for accounts with larger amounts of debt, but the type of debt doesn’t have an impact one way or another on your credit score.


Myth #4: If I wasn’t notified first, my unpaid medical bill can’t get turned over to a debt collector.


Fact: Your doctor’s office will probably try to get in touch with you before turning your bill over to debt collectors, but you don’t have to receive official notification before this can happen.


Myth #5: Any negative marks on my credit report will be removed if I pay the past due medical bill.


Fact: Not always. Once an account has been handed over to a debt collector and this is action appears on your credit report, your score will drop and it could take some time for it to improve again. Negative items are eventually removed and never are permanent, but this can take a few years, even if you’ve paid the debt off. However, you can ask the debt collector who owns the debt to agree (in writing) that they will remove the account from your credit report if you pay it.

Do you need money to take care of medical bills? Peachtree Financial Solutions may be able to help if you’re receiving structured settlement or annuity payments. Contact Peachtree Financial Solutions to learn how you can sell some or all of your future payments for a lump sum of cash.


Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.

Tags: debt, debt collectors, medical bills, medical expenses

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