If you are wondering what happens when a medical bill goes to collections, then you need to understand how medical debt is handled in your state. Even if you’ve worked hard to manage your finances, medical debt can be an unexpected challenge after an injury or illness.
Why Medical Bills are Sent to Collections
When you are asking what happens when a medical bill goes to collections, you also need to know why these bills are sent to collections. Here are a few explanations about why you are getting collections calls:
- Insufficient Insurance Coverage: The best insurance plans don’t cover everything. It’s your responsibility to know what you need to pay. Sometimes, medical bills go to collections because patients don’t realize that they need to pay a deductible or co-pay.
- Missed Bills: Medical bills can be confusing since you receive separate bills from all of the providers. For example, if you are in the hospital for surgery, then you will receive bills from the hospital, anesthesiologist, surgeon, and more. When any of these bills are overlooked, it could result in a portion of your medical debt being sent to collections.
- Unpaid Balances: Making small payments each month isn’t enough to keep your medical bills out of collections. Whether you are underpaying or sending late payments, the medical provider can turn it over to collections.
- Expensive Medical Costs: The price of medical care has skyrocketed. Many people knowingly accept medical care even when they can’t pay the bill in full. Patients ask the question: what happens when a medical bill goes to collections? Then, they make the choice to protect their health and deal with the collection calls after these services are finished.
How Medical Collections Affects Your Credit Report
What happens when a medical bill goes to collections? One interesting thing you will learn is that medical debt is given less weight compared to other types of debt. New scoring models are used on credit scores so medical debt has a lower impact than consumer debt.
Also, patients usually have a grace period of 180 days before the medical debt is applied to a credit report. Additionally, medical debt is removed from the credit report after the debt is paid in full. In comparison, most other collections remain on your credit score for seven years.
Debt Payment Strategies for Medical Debt
Instead of asking what happens when a medical bill goes to collections, you might be better served looking for financial solutions to prevent collections. Options are available to roll your payments into one loan, with a simple monthly requirement that helps you stay ahead of the debt paydown plan.
Debt consolidation and debt settlement are solutions that can be used to help you get ahead of the financial challenges that lie ahead. If you are asking what happens when a medical bill goes to collections, then you also need to consider effective strategies for paying off the debt as soon as possible.