What Will Happen If You Have a Medical Debt

Medical debts differ from other varieties of debt in that you cannot always control when you'll need medical care or the type of treatments you receive -- especially in emergency situations. Like other creditors, however, hospitals and doctor's offices expect you to pay any debts you incur and you can face unpleasant legal consequences for failing to do so.

Insurance Coverage

When you incur medical debt, your health care provider submits claims to your insurance company for the amount you owe. Insurance companies typically receive price breaks on medical care but they do not cover all services in all areas. You are responsible for paying any medical debt you incur that is not covered by your health insurance provider. If you lack insurance, your health care provider will bill you directly. Unlike insurance companies, individuals do not receive automatic price breaks and often must pay the full price for medical care and services.

Collecting Medical Debt

If you cannot afford to pay your medical debt in a lump sum, you have the option of negotiating a payment plan with your health care provider. If you cannot afford payment at all, your health care provider will turn your account over to a debt collector for recovery.

Health care providers do not typically hold reporting contracts with the credit bureaus but collection agencies do. After your unpaid medical bills fall into the hands of a collection agency, the collection agency will report the debt to the credit bureaus and your credit rating will decrease as a result.

Medical Debt Lawsuits

Both your health care provider and any debt collectors that purchase your debt have the right to file a lawsuit against you during the debt recovery process. The goal of a debt collection lawsuit is to force you to make involuntary payments through garnishment. After suing you, your creditor can garnish either your bank accounts or wages, depending on the garnishment restrictions in your state. Creditors can also place liens on your home or other property following a successful medical collection lawsuit.

Bill Payment Help

Hospitals and health care billing services sometimes make errors that result in thousands of dollars in excess charges for the consumer. Medical billing advocates help consumers by identifying erroneous charges and negotiating with the health care provider to have the charges dropped. While medical billing advocates are not free, they provide a valuable service to consumers who are not eligible for government insurance and assistance programs. In addition, certain hospitals provide indigent care programs for uninsured individuals who cannot afford to pay for proper health care. Hospitals do not routinely advertise these programs. Thus, consumers concerned about incurring unmanageable medical debt should ask about the special programs available before agreeing to treatment.