Due to unexpected events or medical emergencies, many patients receive expensive health care treatments without giving thought to the costs. The Consumer Financial Protection Bureau describes how Americans generate high medical debts through unplanned and pressing medical needs.
As noted by the CFPB, hospitals may require patients to sign agreements accepting treatment costs. Signatures provide consent to paying unforeseen expenses in the future. As a result, patients who do not have enough health insurance to cover emergencies could accumulate overwhelming debt loads. In many cases, hospitals send their unpaid medical bills to collections.
Medical debts appearing on a credit report
The range of charges on medical bills could prove difficult to understand and also include errors. One visit to a hospital, for example, may result in several charges from a variety of providers.
Doctors and hospitals typically send information about patients’ unpaid balances to the major credit reporting bureaus. According to Bankrate.com, uncollected medical debts could lower an individual’s credit score by 100 points. Although the reported information may contain errors, the bureaus may use it to calculate a score.
Credit and financial problems leading to bankruptcy
The CFPB reported that more than 40 million Americans’ credit reports showed medical bills in collections during the second quarter of 2021. Their combined worth accounted for 58% of the total debts sent to collection agencies.
Lowered credit scores cause problems when applying for new loans. Families may, for example, find it hard to refinance a mortgage. After falling behind on housing or mortgage payments, many Americans consider bankruptcy as an option for relief.
Solutions to recover from a financial hardship caused by medical bills include filing for Chapter 7 or Chapter 13 bankruptcy. The court may discharge or reorganize most of the filer’s unpaid health care bills and consumer debts.