Medical bills, expenses and charges may seem astronomical, but they do not go away on their own. When bankruptcy is not an option, it's easy to forget about unpaid medical expenses while budgeting to pay more pressing bills, such as food and transportation. Unfortunately, ignoring unpaid medical bills will make matters worse.
Ongoing Correspondence
Typically, doctors do not collect their own bills. Instead, they employ staff or an outside agency to collect amounts due that are not paid by insurance companies. When a bill goes unpaid, the hospital or agency continues to send the bill to the patient.
Bill Collectors
When the mail gets ignored, the hospital sometimes chooses to sell the debt to a bill collection agency. Because the bill collection agency now owns the debt, you now owe the collection agency the amount of your unpaid medial bills. This is when the phone calls start. Your telephone will ring often, each time it will be a different employee of the collection agency. They will not leave a message on your answering machine, so if you are home and not answering the phone it may ring every 20 minutes.
Lawsuit
The bill collection agency has the right to sue you in a court of law in order to collect its debt. Depending upon the amount owed, you will be sued in either small claims court or civil court. Once you are served with notice of litigation, you are required to show up to defend yourself or to settle with the bill collection agency. If you fail to respond, you forfeit and lose the case.
Collection
If you are sued in court by the bill collection agency and lose, the collection agency has the right to collect the money from you. If you still do not pay, they have the option of garnishing your wages. That means your employer will be informed about your unpaid debt, and will be instructed to remove a court-ordered amount of money from your paycheck until the amount of your medical bills is paid.
If you own real estate, the bill collection agency also has the option to put a lien on your property. In this case, the debt becomes public knowledge, and the bill collection agency will be paid if you sell your property.
Taxes
Sometimes, you can settle with the bill collection agency. This means each party agrees that you will pay a smaller amount than the actual debt owed, and the collection agency will forgive the difference.
When and if this happens, the bill collection agency may send you a 1099 tax form for the amount forgiven. Then you are required to pay income tax on the amount of money owed that you did not have to pay.
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