Financial setbacks result from a range of unexpected circumstances, but medical emergencies can rank among the most devastating. As determined by The Commonwealth Fund and reported by Health.com, at least 79 million Americans carry burdensome medical debts.
A popular personal finance company discovered that more than 20 million of its U.S. members had medical bills in collections. In some cases, however, medical debt may prove manageable.
Medical bills may not affect a credit score for several months
It generally takes about six months before unpaid medical bills go to a collection agency. Until then, they may not appear as a negative mark on your credit score. Before a debt collector takes over your medical bills, they may not have the same effect as unpaid credit card bills or mortgage payments.
You may find that you can begin a workable payment plan with a collection agency. As Health.com also notes, prioritizing medical bills over debts such as mortgage or auto loan payments may lead to life-altering circumstances affecting your home and transportation.
Medical bills sent to collection agencies may require a Chapter 13 bankruptcy
While you may hope to set up a payment plan for your medical debts, you may have also experienced a substantial loss of income as a result of your illness or procedure. As outlined on the Administrative Office of the U.S. Courts website, a Chapter 13 bankruptcy may provide a way to keep your home and car while you pay your debts through an affordable court-approved payment plan.
If your income is less than Kentucky’s median income for a similarly sized household, the court may approve a three-year payment plan. The court may then discharge your medical debts at the end of the three-year period. If your household income is over the Bluegrass State’s median income, your plan may last five years.