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Medical debts can create headaches for patients

On Behalf of | Sep 7, 2018 | Chapter 13 Bankruptcy

In a recent study, more than 2 percent of credit reports had a medical debt of less than $200 sent to a collection agency. The study, which was published in the journal Health Affairs, looked at 4 million credit reports from 2016 to come to that conclusion. While these medical debts may seem small, they can turn into major issues for Texas residents who have them sent to collection.

Typically, a hospital or other service provider will wait about six months to a year before turning a debt over to a collection agency. This can both lead to a lower credit score in addition to constant calls from the debt collector. Generally speaking, younger people tend to have more trouble paying a medical debt compared to those in their 60s. Researchers think this is the case because younger people are more likely to be uninsured. They may also make less than older individuals and have less savings.

In addition, researchers noted that patients who miss work because of a medical condition are more likely to have issues paying down medical debts. People who have medical debts are advised to never ignore them. Instead, they should work with the hospital’s billing department to create a payment plan or have a portion of the bill paid by a charity.

Individuals who are struggling with debt may want to consider filing for Chapter 13 bankruptcy. Generally speaking, medical debts and other unsecured balances are discharged at the end of the repayment period. The repayment period lasts for either three or five years. Debtors may also benefit from bankruptcy because they are usually entitled to an automatic stay of creditor contact or collection activity.