What to do if you have medical debt you can’t pay

If you have medical debt you just can’t deal with, you’re definitely not alone. About 43 million Americans have unpaid medical debt. And for many people, mounting medical bills mean mounting stress.

Medical debt is unique in many ways, including that it’s rarely voluntary and often unexpected. Along with a job loss or divorce/separation, medical issues are a top reason that people file for bankruptcy, says Michael Bovee, who’s been working in debt relief for more than 20 years and is the co-founder of Resolve, a company that helps people navigate their way toward financial health.

The question is, what should you do when you have medical bills, but not the money to pay them?

Related Article: How to negotiate bills and avoid medical bankruptcy

How to take action with your medical debt

Even if you know you can’t pay your bills, don’t ignore them. If your debt hasn’t been sent to collections yet, try to stop that from happening. Not only will that keep debt collectors from hounding you, but it will also help prevent them from reporting your unpaid debt to the credit agencies. Debt collectors also can sue you for unpaid debt.

The good news is, you may have more time on your side with medical debt than you do with other types of debt. Recent changes to the way medical debt is reported to the credit bureaus means your debt won’t show up on your report until it’s 180 days past-due and has been reported by a debt collector. That gives you much more time to work out a payment plan before your medical debt starts hurting your credit score. 

Go over your bills carefully

Before you do anything, it’s important to closely read your bills and look for mistakes. An estimated 80% of medical bills contain a mistake. Check for duplicate charges, overcharges or procedures you didn’t have. If you have insurance, call your insurance company to verify anything that seems questionable or to ask why something wasn’t covered.

If your debt is older, find out the statutes of limitations for medical debt in your state. That’s the point where a debt collector can no longer legitimately sue you over your debt. Which doesn’t mean the debt disappears or they have to stop contacting you. It just means they can no longer sue you. Making a payment toward an old debt, or even just admitting it’s your debt, can restart the clock, so be careful when dealing with old debt.

If you’re facing a very large debt or a series of medical bills, you may want to work with a medical billing advocate. These are people who will analyze your medical bills and look for overcharges, duplicate charges or errors. They can talk to your insurer about fixing errors or about something that wasn’t covered. They also can negotiate with doctors and hospitals to lower the amount you owe. Medical billing advocates do charge for their services, so try and find one who offers a free consultation. If you have Medicare, the State Health Insurance Assistance Programs also offers help with complaints, appeals and coverage issues.

Ask for financial help

In most cases, medical care providers would rather get some money from you than none at all. And many providers offer financial aid, payment plans or discounts.

Call your medical provider and explain that you can’t afford to pay your bill. See if they offer a discount for paying a portion of your bill immediately. Ask about financial assistance or charitable programs. Nonprofit hospitals also are required to lower the cost of your treatment if you can prove that you can’t afford to pay, says Martin Lynch, director of education at Cambridge Credit Counseling. 

If your insurance didn’t cover a procedure, or you don’t have insurance, ask to pay the insurance rate or to get the Medicare or Medicaid discount. 

Most medical providers also offer payment plans, often at 0% interest. If you can afford to pay something toward your debt each month, this could be a good way to go. 

Consider settling

Just because there’s a number on your bill doesn’t mean that’s the number you have to pay. Negotiate with your medical provider to pay less than what you owe. You can do this on your own or work with a debt settlement company. 

Keep in mind that if you work with a debt settlement company, they likely will ask you to stop paying your other bills to save up a lump sum settlement to offer toward your medical bills. Bear in mind that will likely hurt your credit scores and put you farther behind on your other bills. 

Things get trickier once your debt has been handed over to debt collectors, but you can negotiate with them to pay less than what you owe.

Should you look at a loan?

You might have considered borrowing money or taking out a loan to pay your medical debt. In most cases, taking out a loan doesn’t make sense because most loans would have a higher interest rate than a medical debt payment plan.

You also don’t want to put mortgage or student loan payments in jeopardy to pay off your medical bills, Lynch says. Falling behind on your mortgage can mean losing your house and, unlike medical debt, student loans usually can’t be wiped out in bankruptcy.

A couple of scenarios where a loan might make sense is if your medical provider offers a big discount for paying off your bill right away or you can put your debt on a credit card with a long-term 0% balance transfer credit card. In that case, you would have to be able to pay off most or all of your debt before the 0% interest rate expires or you’ll be in a worse place than before.

If your situation is extreme — your medical bills are enormous and you can’t afford to pay anything toward them — bankruptcy is also an option. It shouldn’t be considered lightly, but Chapter 7 isn’t the bogeyman many people think it is, Bovee says.

The best way to handle medical bills you can’t pay, though, is to reach out to your medical provider early on in the process. Try and reduce how much you owe, get financial aid and ask about a reasonable payment plan.