Millions of Americans deal with the' financial strain of medical bills, especially if they are uninsured. Those dealing with chronic illness or life-threatening health conditions also have to manage the high healthcare costs that often lead to staggering medical debt.

41% of adult Americans have medical debt, most of which is due to the increasing cost of healthcare and lack of insurance. Other than the stress of debt, unpaid medical bills also have other consequences, such as damage to credit score, increased debt burden, lawsuits, wage garnishment, and filing for bankruptcy.

Fortunately, there are several things you can do to protect yourself from these consequences, such as checking all your bills for errors, requesting a payment plan, negotiating a settlement, and seeking financial aid. Read on to learn more about what may happen if you don’t pay your medical bills.

Reasons for Medical Debt

Lack of health insurance is the leading cause of medical debt. 27.3 million of those under the age of 65 are uninsured due to being self-employed or not having access to insurance through employment.

Acute dental or medical incidents can lead to persistent debt, with 72% of adults saying their debts were due to a short-term or one-time expense, such as a hospital visit. Common sources of health care debts are doctor’s visits, diagnostic tests, and lab tests for many low-income families.

Debt expert and founder of Greenbacks Consulting, Teresa Dodson, shares her thoughts on medical debt. “There is so much that insurance doesn't cover, and this is why medical debt is rising,” Dodson shares. “Try to set up a payment plan for your balance owed. Doctors office are very accommodating these days and want to help,” she adds.

Even among people who have insurance, high deductibles can contribute to unaffordable medical costs. In the next section, we provide more details about what may happen if you don’t pay your healthcare bills.

5 Consequences of Not Paying Your Medical Bills

Ignoring medical bills will not make them go away. It’s best to tackle debt right away by speaking to your healthcare provider or hospital and trying to find a solution. Let’s take a deeper look at what happens if you don’t pay your medical bills.

1. Legal Action

For most people, one of the most worrying unpaid medical bills consequence is legal action. Once your debt is in collections, a debt collector can sue you to recover the amount you owe. In the event of a lawsuit, the court may pass a judgment against you for wage garnishment.

While it's rare, you may go to jail for not paying medical bills if you’re in contempt of court or fail to appear at court hearings.

The statute of limitations for debt is three to six years, depending on debt type and the state in which you live. While debt collectors won’t be able to sue you after the statute of limitations runs out, you’ll still owe the debt.

We recommend that you consult an attorney because each state has its own statute of limitations and repercussions of what happens if you don’t pay your medical bills.    

2. Collection Actions

Knowing what happens when medical bills go to collections will help you be more prepared to deal with the situation. If you fail to pay your medical bills after several reminders, the healthcare provider may send it to a debt collection agency.

Collection agencies try to collect the debt by calling you and sending you letters. You have a right to ask them to verify the amount you owe. If the debt is accurate, they may try to recover the money using several methods.

However, debt collectors must comply with the Fair Debt Collection Practices Act (FDCPA), and they cannot violate your rights by calling you around the clock or using abusive language.

3. Higher Debt 

Those who don’t have the resources to deal with unexpected medical expenses may have to use their savings to deal with it. In many instances, unaffordable medical bills may also lead to using high-interest-rate credit cards, personal loans, payday loans, or other financing methods, which adds to their debt burden.

You may have to file for bankruptcy when debt becomes too high to sustain. 66.5% of bankruptcies in the U.S. are due to medical debt. While bankruptcy can erase most unsecured debts, including medical debt, it has a serious impact on your credit score.

4. Lower Credit Score

Unpaid medical bills can have a negative credit score impact. Hospitals and healthcare providers don’t report to credit bureaus. However, if your debt is turned over to a debt collection agency, it may hurt your credit.

Medical debt under $500 does not appear on your credit report. Additionally, all three major credit bureaus, Equifax, Experian, and TransUnion, wait one year before reporting any unpaid medical bills. If you clear your debt during that time, it won’t impact your credit score.

Medical collections can lower your credit score and make it difficult for you to access credit at competitive rates.

5. Future Healthcare Issues

Unpaid medical bills consequences are not just limited to your finances. Medical debt may also affect your ability to continue treatment or access healthcare services in the future. 15% of adults with current medical debt say they’ve been denied care by a dental or medical provider or hospital due to their debt.

People with medical debt are also more likely to avoid seeking care and prescriptions because they’re hesitant to add to their debt.

How To Manage Unpaid Medical Debt

When medical debt starts piling up, we recommend you be proactive and seek ways to resolve your situation. Here are a few ways to manage unpaid medical debt to consider:

  • Check your hospital bills for duplicate entries and clerical errors.
  • Understand the No Surprises Act that protects you against surprise bills due to out-of-network treatment.
  • Ask the billing department for an interest-free repayment plan for affordable monthly payments.
  • Ask for a discount if you clear the bill with an upfront payment.
  • Consider debt settlement to settle your medical debts.
  • Check if you qualify for financial help from nonprofit hospitals and organizations.
  • Hire a medical billing advocate to help reduce what you owe.

Is Medical Bankruptcy an Option?

As a last resort, you may file for bankruptcy to resolve your medical debt. When you file for Chapter 7 bankruptcy, the court can wipe off most of your unsecured debts, but you’ll have to liquidate some of your assets.

Chapter 13 bankruptcy is a reorganization bankruptcy where you’ll pay some or all of your debts through a repayment plan of three to five years. Bankruptcy can affect your credit score for up to 10 years, so we recommend speaking to a bankruptcy attorney before you proceed.

Resources If You Need More Help With Medical Bills

Here are a few resources to explore if you need more help paying your medical bills:

  • Check if your state has charity care laws that require hospitals to offer discounted or free care.
  • If you’re a veteran, call 866-400-1238 to speak to the VA Health Resource Center for bill disputes.
  • Veterans may also apply for financial hardship assistance in the form of debt relief, copayment exemptions, and repayment plans.
  • Reach out to organizations like CancerCare and Patient Advocate Foundation for financial assistance.
  • See if you qualify for federal financial assistance programs like Medicaid or CHIP for medical care.