Paying for healthcare remains a huge problem in the United States. Even if you have health insurance, a major medical problem or one out-of-network emergency could leave you drowning in debt. Most people don’t realize it, but medical debt is the leading cause of personal bankruptcy in America.
If you are facing overwhelming debt due to medical bills, it is important to know your options for resolving it and getting back on track. These options include – but are not limited to – filing for bankruptcy.
The first option to explore is to get an itemized bill for medical services, look it over carefully and contest any surprising or suspicious charges. Hospitals make mistakes, and insurance companies are often too quick to pass certain costs onto policyholders, even though they should be covered.
This process is frustrating and time-consuming, but both hospitals and insurers are often willing to negotiate or reduce certain charges when they receive pushback. Taking this approach lowers your costs on the front end, before they become debts.
Hospitals will bill insurance first, then they will bill you. Even if your bill is high, you can usually get the hospital to agree to a payment plan that allows you to pay off your bill over time. Hospitals are often willing to be flexible because the alternative is to send your debt to a collection agency or a debt-buying agency, which means less money for the hospital.
If you take this route, it is important to act quickly. Because hospitals don’t have extra resources in the billing department, they may not wait very long to send your debt to collections.
Debt gets sold to debt collection agencies, often for a fraction of what the debt is worth. Therefore, debt collectors can still make a profit even if they collect less than the face value of the debt. If a debt collector contacts you demanding payment, you can offer to settle the debt at a fraction of the price. The only catch is that if the collector agrees to your terms, you’ll need to be able to make the payment in one lump sum.
Before you pay anything, however, it is important to demand that the terms of your agreement be put in writing and sent to you. That way, the debt collector cannot renege on what they agreed to or claim that you were somehow mistaken.
Although bankruptcy is a serious decision that should not be made lightly, it is an effective way to deal with major medical debt that simply couldn’t be resolved any other way. If you qualify for Chapter 7 bankruptcy, your medical debt could be discharged entirely, because medical bills are considered “unsecured debt,” (meaning they are debts without collateral).
Even if you file Chapter 13, however, your medical bills and other debts could be negotiated into an affordable repayment plan and largely or entirely repaid over a three- to five-year period. If any debt remains at the end of the repayment period, it is often possible to have it discharged.
In some ways, medical debt can be almost as debilitating as the medical condition that led to it. But you do have options. To determine which is right for you, please consult with an experienced debt-relief attorney or a financial professional in your area.