How to Reduce Damage to Your Credit Report Due to Medical Bills

People get in over their heads with bills all the time. When it comes to the financial struggle these bills cause, they may not seem that unique from each other. One of the most common expenses that results in people struggling financially is medical bills. Although medical bills can place a financial strain on people, these costs are fairly different from others. If you have incurred high medical bills and are now wondering how to pay for them, or how they will affect your credit score, below is the information you need to know.

Medical Bills Do Not Affect Your Credit Right Away

Some creditors will report a late payment or non-payment right away, sometimes days within the bill being overdue. This is not the case with medical bills, though. The majority of health care providers will not report to the credit bureaus, so it is possible to carry a large balance or make late payments and not have them affect your credit score.

However, health care providers will send your unpaid bill to a debt collector, and that debt collector may report the unpaid balance to a credit bureau, such as TransUnion. Still, you will typically have at least 60 days before the balance is reported. Additionally, medical debt should not appear on your credit report until the balance is a minimum of 180 days past due. Debt collectors will still try to collect on the debt though, even before they have reported it to the credit bureau.

Make Sure the Medical Bill is Correct

You should always make sure any bill you receive is correct and that the creditor or company is asking for the right amount. Medical billing errors are extremely common, and those mistakes can cost you a great deal of money.

You may receive documentation from a health care provider that clearly states “This is not a bill” and be tempted to throw it away. Do not. These documents often itemize the procedures and medications you have received that your insurance company is being billed for. Always keep your bills and these itemized lists and cross-reference them with each other so you can ensure they are accurate.

If you are in the hospital, try and keep a record of any tests you have undergone or medication you have been given. If you cannot do this yourself, ask someone you know personally to do it for you. Compare your own notes to the invoice when it arrives. You may also be able to negotiate a payment plan or a discounted amount with the hospital billing office.

Consider Your Payment Method

You may want to use your credit card to pay off your medical bills, but this is not usually recommended. Medical bills have a great deal of protection for patients and if you transfer the amount owed from your medical bills to your credit card, you lose those protections. If you are expecting your insurance to cover a portion of the amount, or you believe you can negotiate a lower payment, you should try these avenues before you do anything else. After you have paid the bill, you no longer have any negotiating power.

On the other hand, if debt collectors have already started to call you trying to recover the debt, you may want to use a credit card to pay it. Once a debt collector starts calling, it means the protections no longer apply and the collections company will continue to contact you until the total amount is paid. If you pay the medical debt with a credit card, the calls from the collection agency will stop immediately. However, if you do use a credit card to pay your medical bills, always make sure you choose the one that has the lowest interest rate so you do not end up paying too much.

A Personal Loan Can Help You Pay Your Medical Debt

If you can get approved for a personal loan, this can be a very good option to repay medical debt. Personal loans typically have a much lower interest rate than credit cards and so, a personal loan could save you more money in the long run. A personal loan also will not have the drastic impact on your credit score as a credit card will.

Consider Bankruptcy

Bankruptcy should only be used as a last resort, but it can give you the chance at a clean slate if you find your medical bills impossible to pay. Many different types of debt can be discharged through bankruptcy, and that includes medical expenses. Additionally, if debt collectors have already started to contact you about the overdue debt, an automatic stay will be issued that will prevent debt collectors from making these calls. Bankruptcy will affect your credit score, but you can rebuild it over time.

Address the Issue

A drop in your credit score will not last forever, but it can have serious impacts for you.

Fortunately, there are some ways that can help you bounce back. These include:

• Pay your bills on time whenever possible. If that is not possible, you should contact your creditor right away to determine if there is an arrangement that can be made so your account is not reported to the credit bureaus.
• Using a credit card to recover medical debt will lower your credit utilization rate, which will cause your score to drop.
• Keep all credit card accounts open if at all possible. Closing them will only hurt your credit score.

Our Debt Defense Lawyer in Fort Lauderdale Can Help with a Lawsuit

If a medical provider or debt collector has already threatened legal action against you, our Fort Lauderdale debt defense lawyer at Loan Lawyers can help with your case. We have successfully defended hundreds of clients against these lawsuits, and we want to put our experience to work for you. Call us today at (954) 523-4357 or contact us online to schedule a free consultation.