In the past several years, medical debt has become more burdensome for many families. So much so that medical bills have become a major cause of personal bankruptcy. It’s not that people have no health insurance. Many individuals who cite medical debt as the cause of their bankruptcy were actually covered under a health insurance plan at the time the medical expenses were incurred. The problem is that certain medical expenses are often uncovered. Debt settlement may be an alternative to bankruptcy for dealing with your medical expenses.
Make Sure It’s Not Covered
Confirm that your health insurance provider doesn’t cover the expenses. Have your doctor’s office verify that the right medical codes were used for your services and then have them resubmitted to your health insurance company. You should also read through your policy (understanding it as much as you can) to be sure those medical expenses were not covered. Also, have your health insurance company review the claim against your policy. Sometimes mistakes are made with medical bills. Going through these steps will save you some time.
Collections Process for Medical Debts
Medical expenses go through a collections process similar to other debts. The doctor’s office or medical facility will generally pursue you for payment for a few weeks or months, then likely they’ll turn the debt over to a collection agency. Settling the debt is an option at any point in the process. Settling while it’s still with the original creditor, i.e. the medical service provider, is usually a better option because it generally keeps the debt off your credit report.
Negotiating With the Doctor’s Office
You should start the negotiations sooner rather than later. The longer you wait to contact the doctor’s office about your debt, the closer the doctor’s billing department is probably to sending the account to a collection agency. Call the number on your billing statement and ask to speak to someone about paying your account. You could explain that you’re unable to pay the account in full and can’t necessarily commit to a repayment plan. Let them know that you have a set amount available that you can pay as settlement on the debt. Wait for a response. If you feel more comfortable making your request in writing, you can explain your position in a letter and make a settlement offer.
Whether you make the settlement offer in writing or by phone, have the money for the settlement available and ready to pay upon acceptance of the offer.
Negotiating Medical Debts With a Collector
Don’t worry if the doctor’s office doesn’t agree to your settlement offer the first time. You can wait a few weeks and try again or you can wait until the account goes to a collection agency. Making a settlement offer with a collection agency for a medical debt is similar to offering settlement for other types of debts. The upside is that you may be able to settle for a lower percentage of the debt, depending on the age of the debt. The downside is that the debt and any settlement will go on your credit report.
When to File Bankruptcy
Unfortunately, some medical bills are very expensive and even a settlement for a fraction of the debt may be too high. For these debts, consider a Chapter 7 bankruptcy where the debt could be discharged.