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Medical bills are a leading cause of personal bankruptcy

It has long been alleged that medical bills are one of the leading causes of bankruptcy in the United States. In fact, according to 2007 research study more than 60 percent of personal bankruptcies in the U.S. are caused by medical bills. Surprisingly, researchers also found that nearly 80 percent of those filing for bankruptcy due to medical bills had insurance. Tennessee readers may find the following blog on medical debt and bankruptcy interesting.

Despite the clear correlations between bankruptcy and medical debt, medical bills do not show up on a credit report, at least not immediately. In general, hospitals do not report to credit agencies. Unlike late credit card payments, which are reflected almost immediately, unpaid medical bills do not show up until they end up in collections. At this point, the bills begin to affect a person's ability access credit, such as car loans and home mortgages.

There are a number of tactics consumers can use to address mounting debt. For large bills, it is always worthwhile to negotiate a repayment plan. A repayment plan will allow the consumer to establish a more reasonable payment while keeping the bills from going to the collection agency. Whether a provider will agree to the plan, however, depends on the doctor and the bill. Many doctors find repayment plans better than the alternative.

In addition to negotiating a repayment plan, consumers can also put a statement on their credit report if a bill is in dispute. If the consumer is unable to negotiate the dispute with the provider, this is certainly a worthwhile tactic. If nothing else, submitting statements explaining the debt to the credit reporting bureau tells lenders that the person is both aware and conscientious of their credit score, and that they are paying attention to their finances.

Source: Fox Business, "Do Medical Bills Show up on Credit Reports?" Sally Herigstad, March 12, 2013

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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