How to deal with medical debt

Statistics show that 46% of Americans had medical debt in 2020, equal to one in three adults. While any debt is stressful, you shouldn’t ignore the problem. You have several options to tackle your medical debt in Colorado.

Ensure the amount is correct

Mistakes happen, and studies show that this occurs frequently at a rate of 80% with one or multiple errors. Most medical billing errors derive from getting billed directly before it is submitted to your insurance.

Check your Explanation of Benefits page to determine what it covers and what you are expected to pay. Another common billing error is getting charged for the same service multiple times, so check your bill carefully.

Negotiate with the facility

Most hospitals and medical facilities understand that many patients can’t pay a large amount of debt at once. They may be willing to negotiate a reduced bill, or you can ask about assistance and waiver programs for low-income households.

If none of these options are available, ask about a medical debt credit card option. However, avoid using a standard credit card to pay medical debt since the average interest rate is 16.17%.

Consider filing bankruptcy

If you have other debts besides your medical debt, you may be able to discharge it through bankruptcy proceedings. Bankruptcy is a legal means to remove unsecured debts, such as credit card bills and medical debt. Many filers choose Chapter 7, but you have to sell nonexempt assets and pass a means test.

If you fail the means test, you must convert to Chapter 13, which is a debt repayment plan. You don’t have to sell assets as long as you make timely payments, and you can get debts discharged in three to five years. After you file Chapter 7 or 13, the automatic stay prevents third-party collectors from temporarily taking legal action against you, such as wage garnishment.

Bankruptcy should be a last resort, and you can’t file it for a single debt. It might be best to hold on to this option for a future need. In the meantime, medical bill advocates may help you with the bills, but consider the service cost.