What happens if you don’t pay medical bills?

what happens to unpaid medical bills

If you don’t pay your medical bills, the healthcare provider may contact you for payment. If you don’t pay that, your bills can go to collections which can have severe consequences on your finances. If you’re one of the many Americans struggling with medical debt, then this article is for you. Read on to learn more about medical bills and how to handle them when they arise.

What Is Medical Debt?

Medical debt is much like any other form of debt such as bad credit loans, payday loans, and installment loans; It’s money that you owe. However, instead of the debt being from a purchase or credit card, medical debt comes from health and medical services. This could be anything from a broken leg to the costs associated with having a baby. Essentially, any charge for medical expenses can become medical debt if you don’t pay it off right away.

Medical Debt In America

Throughout our lives, we deal with all sorts of unexpected bills. Maybe you’ve experienced a vehicle breaking down, home repairs you weren’t expecting, or children’s school costs that came out of nowhere. But one of the most common unexpected bills is a medical bill for an emergency that catches you off guard. If this is the situation you’re in right now, you’re probably wondering what happens to unpaid medical bills. We’re here to give you the answer. 

New research published in July of 2021 by the Journal of the American Medical Association shows that 18% of Americans have medical debt in collections.1 The paper also revealed that from 2009 to 2020, the largest source of collections debt became outstanding medical bills. This may not surprise you if you’ve ever had to deal with an unexpected medical emergency. After all, how do you account for the unexpected within your budget? It’s not easy.

This type of debt is widespread in America. If you’ve ever visited an emergency room or received treatment for an illness, then odds are you’ve accrued this kind of debt. And just like with any other type of debt, it’s essential to pay it off as soon as possible.

Medical Debt and Health Insurance

One way to help alleviate this burden of the cost of medical care is by signing up for insurance. Many people sign up for health plans through their employers. If you aren’t offered insurance through work, you can still sign up; it just might cost you a little bit more. And for those that have trouble affording health insurance, you may be able to qualify for Medicaid through your state government. Medicaid is a government-run program that offers certain health coverages to residents that can’t afford a standard health plan.

Having health insurance or Medicaid can potentially cover many of the costs of seeking medical care. But it’s crucial to keep in mind that just because you have a health plan doesn’t mean that all of the costs will be taken care of. Many programs only cover a certain percentage of medical costs. Check with your specific insurance company to see what’s covered and what isn’t.

What Happens To Unpaid Medical Bills?

Now to the critical question: What happens to my medical debt if I don’t, or can’t, pay them? The simple answer is the same thing that happens to any other bill or debt you don’t pay—collections.

Leaving a bill unpaid is asking for financial trouble in the future.

Bills you don’t pay can gather a late charge and ultimately end up with a collections company. When this happens, your credit score can drop, your wages can be garnished, and you may have difficulty getting loans in the future. In addition, unpaid bills and collections can stay on your credit report for up to seven years.

What Are Debt Collectors and Collection Agencies?

Paying a medical bill on time isn’t always easy. But it’s crucial so that you can avoid the medical bill being sent to debt collectors. The terms “debt collector” and “collection agency” are interchangeable, and they both describe a company that purchases debt and then pursues the consumer to collect the money they owe.

Debt collectors or collection agencies will usually pay the hospital bill or other debt from the facility for less than what the consumer owes. Once this happens, the debt collectors  own that debt. So now they’ll start reaching out to you instead of the medical provider.

One important thing to remember when dealing with a debt collection agency is that they will often allow you to settle the debt for less than what you owe to the medical provider.

So instead of avoiding the collection agency, it’s wiser to work with them to settle the amount. Since they pay less for the debt than what you owe, they may be willing to entirely get rid of the debt for much less than the total amount.

The Path Your Medical Bills May Take

Here is the typical path that medical bills take:

The Path Involved With Medical BillsDescription of Each Step
Step 1You receive a bill from a doctor, hospital, or medical facility that your healthcare provider doesn’t cover.
Step 2The medical facility contacts you to inform you about the bill and its due date.
Step 3If you fail to pay the bill by the due date, the medical facility considers it past due.
Step 4The medical facility may reach out to you again to settle the debt, or they may proceed to the next step.
Step 5If the bill remains unpaid, the medical facility may sell the debt to a collection agency.
Step 6The collection agency starts contacting you to collect the outstanding payment.
Step 7A note about the bill in collections may appear on your credit report, potentially affecting your credit score for up to seven years.
Step 8The collection agency continues its efforts to collect the debt and may pursue wage garnishment through your employer until the bill is paid off.

How Does An Unpaid Medical Bill Affect My Credit Report?

Beginning in July 2022, paid medical bills will not be included in your credit reports. While paid medical bills will not, unpaid bills will only show up if they are unpaid for 12 months. 

How Do Credit Reports Work?

Credit reports are essentially lists of your financial accounts and behaviors. They’re maintained by companies called credit bureaus or credit reporting agencies. These credit reporting agencies track your financial habits and compile them into documents called credit reports.

This report is what the credit bureaus use to give you a credit score. And the credit score is what lenders use to decide whether or not they should offer you loans. When you apply for a new loan, the lender will likely want to run a credit check to see how financially trustworthy you are unless you’re applying for no credit check loans.

It’s vital to keep track of credit reports. The credit bureaus are required to make credit reports available to consumers. So make sure you check yours periodically to confirm that everything on it is accurate.

Some Things to Keep in Mind

Some credit reports can have errors, which need to be reported to the bureau immediately. Since credit reports are responsible for so much of our financial lives, it’s essential to ensure they’re accurate. If a medical collection is on your credit report by mistake or after it is paid, you can remove your medical collections from your credit report.

Many different things can affect your credit report, and ultimately, your credit score as well. For example, any bill or balance that you don’t pay on time can end up hurting your overall score. And a low credit score can make it difficult to get loans, credit cards, or other financial services.

If you have medical bills that you haven’t been able to pay, it’s in your best interest to talk to the medical facility and try to settle the debt.

They may be willing to work with you and settle the amount for less than the actual cost of the medical bill. Find out if they’re willing to set up a payment plan so that you can pay off a small amount every month.

If you can’t come to an understanding to settle the amount, and the facility moves the debt over to a collection agency, then your credit score can suffer. Having a debt in collections on your credit report can cause your overall score to drop by quite a bit. 

According to some accounts, a medical bill in collections could lower your score by up to 100 points or more.

This is one of the main reasons why paying medical bills on time is so important. Credit scores are ever-fluctuating things, and you need to pay your bills on time to keep yours in good standing. 


What options are available if I can’t pay medical bills due to financial hardship?

Many medical providers and nonprofit hospitals offer financial assistance programs. Contact the provider’s billing department to discuss your situation and explore options like reduced fees or payment plans.

How do unpaid medical bills impact my credit report?

Unpaid medical bills can be reported to the three major credit bureaus, potentially damaging your credit score. It’s important to address these bills promptly to avoid negative credit reporting.

Can health insurance prevent medical debt when seeking health care?

Health insurance coverage can significantly reduce healthcare costs, but it may not cover all expenses, leading to unpaid medical bills. Always check what your insurance policy covers to avoid surprise healthcare bills.

What should I do if a debt collector contacts me about unpaid medical debt?

If contacted by a debt collector, verify the debt’s accuracy. Be aware of your rights under the Fair Debt Collection Practices Act, and consider negotiating a payment plan or settlement with debt collectors.

How can I negotiate medical bills directly with my healthcare provider?

Contact your medical provider’s billing department to discuss your bill. Ask if they can reduce the charges or offer a payment plan, especially if you received out of network services or were billed for the same service multiple times.

Are there financial assistance options for hospital bills?

Yes, many hospitals, especially nonprofit ones, offer financial assistance options. You may qualify based on income level or financial hardship. Contact the hospital’s billing department for more information.

How does the Affordable Care Act affect medical billing and insurance coverage?

The Affordable Care Act has provisions that can impact medical billing and insurance coverage, such as caps on out-of-pocket expenses and requirements for certain preventive health care services to be covered.

What is the impact of the No Surprises Act on unexpected medical debt?

The No Surprises Act protects patients from surprise medical bills for emergency services and certain services at in-network hospitals, reducing the likelihood of unexpected high medical bills.

Can I seek help from a financial counselor for managing medical debts?

Yes, financial counselors can provide guidance on managing medical debts, including negotiating with healthcare providers and understanding health insurance coverage and financial assistance programs.

What are the best practices for dealing with medical billing errors?

Review all medical bills and insurance statements for errors. If you find discrepancies, contact the doctor’s office or hospital billing department immediately to dispute the charges.

How do I handle medical bills from out of network providers?

For bills from out of network providers, first verify the charges with your health insurance company. Then, discuss with the provider about any possible reductions or payment plans, especially if the services were part of an emergency care.

What role do major credit bureaus play in unpaid medical debt reporting?

Major credit bureaus record unpaid medical debts, which can affect your credit score. However, there’s usually a delay before medical debts are reported, allowing time for payment or dispute resolution.

How can I avoid medical debt collections/debt collectors?

To avoid medical debt collections and debt collectors, promptly address any unpaid medical bills, communicate with your healthcare provider about payment options, and ensure your health insurance company has processed all claims correctly.

In Conclusion With CreditNinja

Medical bills can pile up quickly. If you don’t address them right away, they can get out of hand and snowball into a more significant financial issue. Having a health plan through an insurance company, your employer, or Medicaid can help to alleviate some of these costs.

Remember that many medical facilities are willing to work with patients. They might lower the overall cost if you speak with them and let them know your financial situation. This could make paying medical bills a little bit easier.

Ask them about setting up a payment plan if you can’t afford the total amount. Using a payment plan can help by spreading the payments out over time and making repayment more manageable.

CreditNinja wants you to emphasize that having medical bills is a normal part of life for many Americans. Learning how to manage them is the critical part. Don’t forget that credit reports and credit scores may be affected if you don’t pay them off. And low credit scores make every other aspect of your financial life more difficult. Low credit scores tell lenders, banks, and credit card companies that you aren’t trustworthy.


  1. Americans’ Medical Debts Are Bigger Than Was Known, Totaling $140 Billion | The New York Times
  2. How to Get Help Paying Medical Bills | US News
  3. Medical Debt 101: How a Medical Bill Becomes Medical Debt | Sycamore Institute
  4. Does Paying Collections Improve Credit | Lexington Law

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