What Happens If I Don’t Pay a Medical Bill?
Explore the full scope of what occurs when medical bills aren't paid, impacting your financial health over time.
A medical bill represents the financial obligation incurred for healthcare services received, ranging from routine check-ups to complex procedures. These bills are typically issued by healthcare providers, such as hospitals, clinics, and individual practitioners, to patients or their insurance companies. When these financial obligations remain unmet, they transition into unpaid medical debt, which can initiate a series of escalating consequences. Understanding these potential outcomes is important for individuals navigating the complexities of healthcare finance.
Initial Stages of Non-Payment
When a medical bill remains unpaid, the initial response typically comes directly from the healthcare provider’s billing department. Patients will likely receive a series of reminder notices, often in the form of updated statements indicating the past-due balance. These statements may specify the original amount owed, any new charges, and the period for which the payment is overdue.
Alongside written communications, the provider’s internal billing staff may initiate phone calls to the patient. These calls remind patients of outstanding debt and explore payment options, such as payment plans. Providers may also assess late fees or interest charges on overdue amounts, depending on their policies.
The provider’s internal collection efforts typically continue for a period, often ranging from 90 to 180 days, before external measures are considered. This internal phase allows the patient an opportunity to resolve the debt directly with the healthcare facility. Throughout this stage, the debt generally remains with the original medical provider, who retains direct control over the collection process.
Impact on Credit
Unpaid medical bills can significantly affect an individual’s credit score, though not immediately. Healthcare providers generally do not report directly to credit bureaus; instead, the debt must typically be sent to a collection agency before it impacts credit reports. A 365-day grace period often applies, so the collection account won’t appear on a credit report until one year after delinquency.
Once reported by a collection agency to the three major credit bureaus—Experian, Equifax, and TransUnion—an unpaid medical collection account can negatively influence credit scores. Lower scores make it challenging to obtain loans, favorable interest rates, or affect housing and employment opportunities. Unpaid medical collections over $500 can remain for seven years, but paid medical collection accounts are typically removed.
Furthermore, medical debts with an initial reported balance under $500 are generally excluded from credit reports altogether. This change aims to reduce the impact of smaller medical debts on consumer credit. Despite these changes, a significant unpaid balance can still lead to a substantial drop in credit scores, potentially by many points.
Debt Collection Agency Involvement
If internal collection efforts fail after several months, the unpaid medical bill may be transferred or sold to a third-party debt collection agency. The debt is then owed to the collection agency, which assumes responsibility for pursuing payment. The original medical provider might still be involved in some capacity, but direct communication regarding payment shifts to the agency.
Debt collection agencies employ various methods to contact debtors, including frequent phone calls, sending demand letters through postal mail, and sometimes emails. These communications will typically state the amount owed and the original creditor. They may also request financial information or offer payment arrangements, often with increased pressure.
Their primary objective is to recover the debt, often purchased for a fraction of its value, then collected in full. While debt collectors are permitted to contact individuals to collect on legitimate debts, they must adhere to regulations regarding the frequency and nature of their contact. The shift to a collection agency often signals a more aggressive phase of debt recovery, as these entities specialize solely in collecting outstanding balances.
Potential for Legal Action
For larger medical debts or failed collection efforts, the provider or agency may initiate a civil lawsuit against the debtor. This serious step is typically reserved for significant outstanding balances, potentially thousands of dollars. The decision to pursue a lawsuit often follows a period where the debt has been in collections without resolution.
A civil lawsuit begins with the debtor receiving a summons and complaint, official court papers notifying them of the legal action. Respond to these documents within a specified timeframe, often 20 to 30 days, to avoid a default judgment. Failure to respond can result in the court ruling in favor of the creditor without the debtor’s input.
If a judgment is entered against the debtor, the creditor may then pursue various methods to collect the money owed. These potential outcomes include wage garnishment, where a portion of the debtor’s earnings is legally withheld by their employer and sent directly to the creditor. Another possibility is a bank account levy, allowing the creditor to seize funds directly from the debtor’s bank accounts. In some instances, a property lien might be placed on real estate, meaning a claim is made against the property, which could affect its sale or transfer until the debt is satisfied.