Medical debt is one of the most common sources of financial stress in the United States. Even people with excellent health insurance may end up owing large amounts of money because of deductibles or coinsurance obligations. People who require extensive medical support, such as transplants, complex surgery or cancer treatment often end up responsible for a significant portion of their total medical costs.
If they cannot pay everything that they owe shortly after they complete treatment, they may find themselves facing relatively aggressive collection efforts. Many hospitals and private medical practices have in-house collection departments. Others sell their debts to collection companies.
Attempts to collect on medical debt can be quite aggressive and can force people to look into solutions for their debt, including personal bankruptcy. What do those with medical debt need to know about medical collection efforts?
Liens are a possibility
The civil courts can award hospitals and other medical businesses liens after they provide care. For example, if an individual requires intensive emergency support after a car crash, the hospital treating them may ask for a lien against any insurance or personal injury recovery that they receive. Those liens may impact how well people bounce back from the financial strain of major injuries.
Collection companies might violate the law
Many medical service providers and hospitals avoid directly engaging in aggressive collection tactics. Instead, they hire outside collection agencies or sell their medical debts to collection companies. The problem with this practice is that those collection companies are often incredibly aggressive.
In some cases, they even break the law. They attempt to collect on debts that people have already paid or that are so old that they no longer appear on credit reports. In some cases, they may tack on fees to the original debt, which may be a violation of the debtor’s rights.
Bankruptcy offers immediate relief
Those worried about a debt-related lawsuit stemming from medical bills may want to file for personal bankruptcy. A bankruptcy filing leads to an automatic stay.
Creditors have to stop calling and sending letters. They also typically need to dismiss pending lawsuits. Bankruptcy can also lead to the discharge of eligible debts, including large medical debts owed to hospitals and other care providers.
Responding appropriately to increasingly aggressive collection efforts can help people take control of their medical debts. Personal bankruptcy can offer more thorough protection than payment plans or other drastic financial moves intended to help cover medical debts, such as pulling money out of retirement savings accounts.