Some debts we choose to have such as buying a home, a car or going back to school. You can even have some medical debt you plan on, such as having a baby, but there is other medical debt that can sometimes sneak up on you when you least expect it. Nearly 40% of people who filed for bankruptcy in 2019 said medical debt was a large contributing factor (according to a study in the American Journal of Public Health). Whether it's an accident, illness or some chronic condition that comes up, it can lay you flat not only physically, but financially as well. If you find yourself in this situation, here are a few things you need know about this type of debt:
Medical Debt Differs From Other Debt - Other debts such as mortgages, credit cards and car loans are generally from financial institutions that are in business to make money off of debt. You may have interest changes if you miss a payment or late payment fees which can increase the debt more quickly. Most medical debt from hospitals and doctors don't operate this way which may be good for you. Hospitals generally don't charge interest on debt and there may be lower late payment fees. Also, your credit score may not be hit quite as hard at first with medical debt. Generally if the bills are less than six months past due, you won't get hit. This will give you some time to be able to manage the debt and how you will pay it. They also remove from your record medical debt that is later paid by insurance.
Don't Replace Debt with Debt - Don't put your home at risk with a home equity loan or a reverse mortgage for medical debt. Don't even pay it with a credit card that some medical places offer (or your own) because once the debt is held by something different, you lose your ability to negotiate with the doctor or hospital on the debt. Some medical debt can start small and manageable, but then later turn into something worse, so, don't risk it. If your income is low enough, you might qualify for Medicaid and in some cases, this can be retroactive.
Collectors & the Law - Once a provider decides you are not likely to pay what you owe, they may turn it over to a debt collector. Under the federal Fair Debt Collection Practices Act (FDCPA) collectors can't "harass, oppress or abuse" you or anyone else in connection with trying to collect a debt. That means if they threaten you or intentionally make annoying phone calls or make false or deceptive claims about who they are, what you owe and what they can do if you don't pay up, they MUST stop contacting you if you ask. However, they can ultimately can go to court to collect your debts and garnish your wages, Social Security or VA benefits. In that case, you can still find help with some Health Law Advocates that can help you on your behalf. One other thing, be sure you owe what a debt collector says you owe. You have 30 days after a collector contacts you to ask for proof that you actually owe the amount demanded. Until the collector validates your debt, they have to leave you alone. Medical debts can be sold multiple times and mistakes can be made so be sure you owe what they say you owe.
Hospitals May Help - In some cases, hospitals may work with you on a payment plan that you can handle and some doctors may as well. Be sure to ask right away. If you are willing to be consistent in a payment plan, generally they will allow you to pay until the debt is done without a lot of interest, fees or hassle.
All of us will face some sort of medical issues in our lives and may have a period of time when medical debt will hit us unexpectedly. Of course, do your best to save and prepare for this in advance, however, know what can help you if you find yourself is this situation.