What Happens When You Don’t Pay Medical Bills?

Receiving medical services often introduces financial uncertainty. Navigating the healthcare billing system can be challenging, leaving patients unsure about payment and the repercussions of outstanding balances. Understanding what happens when medical bills remain unpaid is important, as consequences can impact financial standing. This article explains the sequence of events and implications when medical bills are not paid.

Understanding the Initial Billing Process

After medical care is provided, patients typically receive two primary documents: an Explanation of Benefits (EOB) from their insurance company and a medical bill from the healthcare provider. The EOB is not a bill but a summary from the insurer detailing services received, the provider’s charges, how the insurance processed the claim, and the amount the patient might owe. Patients should compare their EOB with the actual medical bill to ensure accuracy and identify any discrepancies before making a payment.

Healthcare providers send the official medical bill, indicating the amount due after insurance adjustments. The billing cycle generally begins with this statement, and patients are given a period to submit payment, ranging from 30 to 90 days. During this initial phase, providers may send reminder notices or follow-up communications if payment is not received. Many hospitals and clinics offer internal payment plans or financial assistance programs (sometimes called charity care), which can reduce or waive costs for eligible individuals.

The Role of Debt Collection

If a medical bill remains unpaid after the initial billing period, typically between 90 and 180 days, the healthcare provider may transfer the delinquent account to a third-party debt collection agency. This transition marks an escalation from the provider’s internal billing efforts. Collection agencies are specialized in recovering overdue debts and employ various methods to contact individuals, including phone calls and letters. Their communication tends to be more assertive than the original provider’s.

Upon receiving communication from a debt collector, individuals have specific consumer rights, including the right to request debt validation. This means the collector must provide written proof of the debt, including the amount owed and the original creditor, within 30 days of initial contact. Collection agencies may also offer settlement options, proposing to accept a reduced amount—often between 50% to 70% of the balance—to resolve the debt. Negotiating directly with the provider or the collection agency can be an option to manage the outstanding balance and avoid further negative consequences.

Credit Reporting and Financial Implications

Unpaid medical bills can impact an individual’s financial standing through their credit report. Recent changes in credit reporting rules have altered how medical debt is handled by the three major credit bureaus: Equifax, Experian, and TransUnion. As of July 2022, paid medical collection debt no longer appears on consumer credit reports. There is also a one-year waiting period before unpaid medical collection debt can appear on a credit report, allowing consumers more time to resolve issues or make payment arrangements.

Since April 2023, medical collection debt with an initial reported balance under $500 has been removed from credit reports entirely. Despite these changes, larger unpaid medical balances can still negatively affect credit scores, potentially reducing a good score. The Consumer Financial Protection Bureau (CFPB) finalized a rule in January 2025 to ban the inclusion of medical bills on credit reports used by lenders, aiming to prevent debt collectors from coercing payments. This rule is expected to remove an estimated $49 billion in medical bills from credit reports for about 15 million Americans.

Legal Actions and Consumer Protections

When medical bills remain unpaid after collection attempts, healthcare providers or debt collectors may pursue legal action. A lawsuit is typically considered for larger outstanding amounts after other collection efforts have failed. The legal process begins with the individual receiving a summons, an official notice to appear in court to respond to the claim. Failure to respond to a summons can result in a default judgment against the individual, meaning the court rules in favor of the creditor without the individual presenting their case.

A court judgment enables the creditor to pursue more aggressive collection tactics. These can include wage garnishment, where a portion of the individual’s earnings is withheld by their employer to pay the debt. Other potential consequences include bank levies, allowing the creditor to seize funds from bank accounts, or property liens against real estate, preventing its sale or transfer until the debt is satisfied. Federal law limits the amount that can be garnished from wages, a percentage of disposable earnings.

Consumers are afforded protections under the Fair Debt Collection Practices Act (FDCPA), which governs the conduct of third-party debt collectors. This federal law prohibits collectors from abusive, unfair, or deceptive practices, such as harassment or false representations. The FDCPA also requires disclosures and ceasing contact upon written request. While federal law provides a baseline, some states have enacted additional protections against medical debt collection, including limitations on wage garnishment or prohibitions on certain practices. The statute of limitations for medical debt, which varies by state, dictates the timeframe within which a creditor can file a lawsuit to collect.