The Truth About Medical Debt and How to Avoid It
Medical debt can ruin your credit, your peace of mind, and your future. It can also land you in court or even bankruptcy. But you can’t escape it by paying a little bit every month. That’s a myth that many people fall for.
The reality is that unless you have a written agreement with your medical provider, they can send your account to collections at any time. And once that happens, you will face more trouble. The collectors will charge you extra fees, interest, and harass you for payment.
The best way to avoid medical debt is to prevent it. You can do this by staying healthy and having insurance that covers your medical expenses. But if you already have medical debt, you can try to negotiate a payment plan with your medical provider. You need to get the agreement in writing and make sure that both parties sign it. You also need to stick to the plan and pay on time. Otherwise, you risk losing the deal and facing collections.
If you are drowning in medical debt and can’t afford to pay it, you may consider filing for bankruptcy. Bankruptcy can erase most of your medical debt and give you a fresh start. However, bankruptcy has serious consequences for your credit and future borrowing. You should consult a bankruptcy lawyer before making this decision.
Medical debt can be a nightmare, but you can avoid it or deal with it effectively. By taking proactive steps, you can protect your health and your finances.
How Medical Debt Can Lead to Legal Trouble
Medical Debt When you fail to pay your medical bills, the doctor’s office may hand over the debt to a collection agency.
The agency will then contact you repeatedly, asking you to pay up.You have the option to negotiate a payment plan with the agency. But if you don’t, the agency may take you to court.
The agency will first send you a legal notice, asking you to respond or show up in court. Then, the court will schedule a hearing. If you ignore or lose the hearing, the judge will issue a judgment against you.
A judgment is a legal document that says you owe the debt. With a judgment, the creditor can take money from your paycheck or bank account.
Is Monthly Payment on Medical Bills a Smart Solution to Free from Medical Debt-Bills?
Some people believe that they can avoid trouble with their medical bills by paying a small amount every month, such as $5 or $10. They think that as long as they are paying something, the hospital has to leave them alone.
But this is not true. There is no legal requirement for a minimum monthly payment on medical bills. If there was, many people would not have to file for bankruptcy because of medical debts.
The reality is that the medical provider can take legal action or send your debt to a collection agency if they are not happy with the amount that you are paying. Their choice will depend on how much you owe and how likely they think it is that they can get the money.
For instance, if you owe a large amount, they have more motivation to pursue the medical debt. Or if you have a high income, they are more likely to try to collect. And if you only get social security income, then they are more likely to just take whatever you willingly send in.
The main factor is how forceful the health care provider is in chasing debts. Some companies are more pushy than others in collecting debts.
This false notion that you can fend them off by paying $5 per month is supported by the fact that sometimes it works. Some creditors would not have bothered to collect the debt even if you paid nothing.
How to Deal with a Huge Medical Bill?
The first thing you need to do is not to ignore your medical bills.
You may be able to pay them off gradually if you contact the hospital or the doctor and ask for a payment plan. You can also request a lower amount or a discount.
You may get a better deal if you pay them off faster. You can also ask if they have any programs to help you with your bills if you are struggling financially. You may need to show proof of your income and expenses. This could lead to them waiving some or all of your bills.
The second thing you need to do is not to use your credit card to pay your medical debt.
Your credit card will charge you more interest than the medical provider. Your debt will grow faster if you transfer it to your credit card.
And if none of these options work for you, you may have to consider bankruptcy.
There are two kinds of bankruptcy cases that people usually file:
Chapter 7 – This is a type of bankruptcy that will get rid of all your medical debt without you paying anything.
Chapter 13 – This is a type of bankruptcy that will restructure your debt into one monthly payment. You may pay some or none of your medical debt, depending on your situation.
At the end of the Chapter 13 case, any remaining medical debt will be wiped out.
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