When it comes time to purchase a car, refinance a home mortgage or apply for a new credit card, past medical procedures are probably the last thing on your mind. But for many Arizona patients, overdue medical bills can have a huge impact on your credit score, and in many cases, former patients are not even aware they have ongoing obligations from a medical provider.
A Widespread Problem
Debts that go into collection generally appear on a consumer's credit report, lowering their overall score. A low credit score can be detrimental in many ways, from impairing your ability to borrow money to substantially increasing closing costs on a home. According to a bulletin issued by the Federal Reserve, almost half of all collection accounts that appear on consumer credit reports are unpaid medical bills, beating out even credit card debt as a source of low credit scores.
Even for those who generally keep up on their bills, medical debts are often a persistent problem. Medical bills that consumers believe have long since been taken care of can pop up seemingly out of nowhere.
There are several reasons why medical bills are different from other types of unpaid obligations. Often, at the time medical debt is incurred, patients are dealing with health issues that make it difficult to keep track of charges. Additionally, medical billing is often processed by different companies, and separate doctor, hospital or lab fees may arrive at irregular intervals months after a procedure has been completed. Sorting out what insurers have paid and what is still owed can be confusing, to say the least.
When a medical bill slips through the cracks and goes unpaid, health care providers typically do not report the debt directly to credit reporting agencies like most creditors would, but instead sell unpaid bills to collection companies for a fraction of their face value. This is troublesome for affected patients, because items in collection are weighed more heavily in credit reports than other types of debt.
Difficult to Know What You Owe
A bill can go to collections even when a patient is still discussing payment with a health care provider or insurer. For small bills, collection agencies may not make any effort to collect payment, giving consumers little or no notice of obligations that impact their credit. Even with a copy of your credit report, it may not be possible to track down where unpaid bills originated.
Some 14 million Americans are dealing with medical bills they believe were sent in error to collection agencies - including countless patients from Arizona. If you are one of them, or have any other questions about debt and credit, contact an experienced bankruptcy attorney in your area today.
