Unpaid bills for medical services can result in a lien on your home from the medical service provider, such as your doctor, a hospital or medical laboratory. A lien on your house gives the creditor, or lien holder, a type of legal interest in your home and makes selling or financing the home more difficult.
Function
Some medical creditors must go to court and get a judgment against you before a lien is filed; you receive notice of the action from court by mail or served on you in person. The court issues the judgment after the creditor has given the court evidence of your medical debt and the time for you to contest or answer the action has passed. A "default" judgment is granted to the creditor if you do not show up to court at all. The creditor then files the judgment in the local county land records, creating a lien on any real estate you own in that county.
Effects
The lien must be addressed if you try to sell, refinance or take a new mortgage out on your home. Your lender usually requires the lien be paid in full before you are allowed to mortgage or refinance; you may be able to obtain a release of your home from the lien by the medical service provider if you are refinancing and not taking out additional money. Part of your proceeds from a sale go to the medical creditor in return for a release if you are selling.
Considerations
Liens for medical debt terminate after a number of years, usually 10 years from the date the lien was filed in the land records. Medicaid, the federal low-income health insurance program, and Medicare, the federal health insurance program for the elderly, both have special rules for liens and do not need court judgments. A lien placed by either program on your home because you are in a hospital or nursing home may dissolve if you return home.
Unpaid medical bills resulting in liens on your home can usually be included in bankruptcy, the federal court process that allows you to eliminate your debt or make a court-enforced payment schedule with your creditors.
Misconceptions
Private medical creditors generally do not attempt to take a home to satisfy a lien because of other deterrents. State legislation may prohibit the action if your income is under a certain amount. The cost of the court process may be too high when compared with your actual debt, and other creditors with more legal priority, such as a first mortgage lender, must be considered by the medical creditor.
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