What Will a Hospital Do When I Don't Pay the Bill?

Sixty-two percent of bankruptcies in 2007 involved medical debt, and most medical bankruptcies involve middle-class families with homes and college-educated breadwinners, reports a study by Harvard and Ohio University researchers published in "The American Journal of Medicine" in 2009. Bankruptcy, however, is not always necessary when tackling a hefty medical bill. Most hospitals will work with patients to make their charges more affordable.

What if You Just Don't Pay?

Hospitals can pursue an unpaid bill like any other creditor or service provider would. Most commonly, hospitals send unpaid bills to debt collectors or initiate litigation, which can result in a lien on your house or wage garnishment. Jail time can also be a consequence, though it's rare.

Considerations

Most hospitals have moved away from the heavy-handed tactics employed by most bill collectors. Hospitals run for profit can deduct unpaid medical bills from their taxes, and nonprofits, which make up the bulk of hospitals, can use unpaid bills in marketing campaigns for more federal assistance and fund-raising efforts. Nonprofits are legally required to go after any bills, but the law does not detail what actions they must take.

Effects

If the hospital sends your bill to a collection agency, the collector will pursue it for as long as the statute of limitations allows -- usually four to six years. After this time the bill is no longer valid. In the meantime, however, this could wreck your credit rating. In the unlikely scenario that a hospital sues to obtain payment, you must appear before a judge or the hospital will automatically win its judgment.

Tip

Always attempt to negotiate with your hospital if you cannot pay a bill. Being in a bad financial situation will give you better bargaining power. Hospitals often accept reduced payments, because unpaid bills are common. Hospitals lost $34 billion in unpaid bills in 2007, according to "Bargaining Down the Bills," a March 2009 article in "The New York Times." If you know of your hospital stay ahead of time, strike a deal beforehand. Ask for the lowest price the hospital would charge an insured person.