Dealing with Unpaid Medical Debts

Medical debt is different from credit card debt in ways that matter — and most people don't know the rules.

People come to us regularly carrying both: a stack of credit card balances and a pile of unpaid medical bills they've been avoiding. The instinct is usually to treat them the same way, which means avoiding both and hoping something changes. But medical debt has its own rules, its own protections, and its own negotiating dynamics that are worth understanding separately.

The good news is that medical debt is often more flexible than consumer debt. Hospitals and healthcare providers — especially nonprofits — operate under different financial incentives than credit card companies, and there are protections in place that simply don't exist for other types of debt. Here's how to navigate it.

Medical Debt and Your Credit Report: Recent Changes

For a long time, unpaid medical debt was treated the same as any other collection account on your credit report. That's changed significantly in recent years.

As of 2023, the three major credit bureaus — Experian, Equifax, and TransUnion — removed medical debt under $500 from credit reports. Paid medical debt collections are also removed. And medical debt in collections must now be at least 12 months old before it can appear on your credit report — giving consumers significantly more time to resolve bills before they affect credit scores.

The Consumer Financial Protection Bureau (CFPB) has pushed for further restrictions, and while the regulatory landscape continues to evolve, the direction has consistently been toward limiting medical debt's impact on creditworthiness. This doesn't mean you can ignore medical debt — it can still be collected, and providers can still sue for unpayment — but the window for addressing it before it damages your credit is much wider than it used to be.

Your First Move: Review the Bill for Errors

Before you pay anything or enter any payment arrangement, request an itemized bill. This is your right, and it matters: medical billing errors are startlingly common. A 2023 analysis found billing errors in a significant portion of hospital bills reviewed, ranging from duplicate charges to services never rendered.

Go through the itemized bill line by line. Look for:

• Duplicate charges for the same service
• Charges for services or supplies you don't recognize
• Upcoding (billing for a more expensive procedure than what was performed)
• Operating room or facility fees that seem disproportionate
• Charges that should have been covered by insurance

If you find errors, dispute them with the provider's billing department in writing. Keep copies of everything. Errors that are corrected can meaningfully reduce what you actually owe.

Negotiate Directly with the Provider

Hospitals and healthcare systems — especially nonprofit hospitals, which make up the majority of U.S. hospital beds — are often more willing to negotiate than people expect. Here's why: nonprofit hospitals are required by the IRS to provide community benefit, which includes charity care for patients who can't pay. They have a structural incentive to resolve bills rather than write them off entirely.

Steps to negotiate:

Ask about charity care and financial assistance programs. Many hospitals have formal programs that reduce or eliminate bills for patients below certain income thresholds. These programs are often not proactively disclosed. Ask the billing department directly whether you qualify.

Request a prompt-pay discount. If you can pay something immediately, ask what discount they'll offer for a lump-sum payment. Hospitals often prefer receiving 40–60% of a bill immediately over waiting for full payment over years.

Propose a payment plan. If you can't pay in full, a payment plan that you can actually sustain is better than no payment. Most hospitals will set up zero-interest payment plans, which is meaningfully better than the 22–27% APR on a credit card.

Get everything in writing. Any negotiated reduction or payment arrangement should be confirmed in writing before you make your first payment.

When Medical Debt Gets Sent to Collections

If your bill goes to collections, the dynamics shift somewhat — but your negotiating position doesn't disappear.

Medical debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA), which means they cannot harass you, make false statements about what you owe, or threaten actions they can't legally take. You have the right to request debt validation — written confirmation of what you owe, to whom, and the amount — within 30 days of first contact.

Once a medical debt is in collections, you can still negotiate a settlement. Debt collectors purchase portfolios at a fraction of face value, which means there's room to settle for less than the full balance. A settlement for 40–60% of the original balance is not unusual for medical collections.

If a medical collection is affecting your credit, check the date of the original delinquency carefully. Given the new 12-month rule and the removal of sub-$500 collections, you may find that some medical entries on your report are no longer permitted — which means you can dispute them directly with the credit bureau.

What to Do If You're Carrying Both Medical and Credit Card Debt

This is where prioritization matters. Medical debt, while stressful, generally has softer consequences than credit card debt in the short term: no interest accumulation at 25% APR, more negotiating flexibility, and as noted, more limited credit reporting impact.

Credit card debt compounds daily and can escalate quickly to charge-off status, lawsuits, and wage garnishment. If you're carrying both, high-interest credit card debt is typically the more urgent problem from a financial math perspective.

If the combined weight of medical and credit card debt has put you in a position where you can't manage either effectively, a broader debt relief solution may make sense. Our debt relief program is designed for unsecured debt — which includes medical bills — and can address multiple accounts simultaneously rather than dealing with each creditor separately. Understanding how debt settlement works can clarify whether that's the right fit for your situation.

Frequently Asked Questions

Can a hospital sue me for unpaid medical debt?

Yes. Medical providers can and do file lawsuits for unpaid bills, particularly for larger balances. A judgment against you can result in wage garnishment or bank levies depending on your state's laws. This is why ignoring medical debt entirely is a risk — avoidance doesn't make it go away.

Can medical debt be included in a debt settlement program?

Yes. Medical debt is unsecured debt, which makes it eligible for inclusion in a debt settlement program alongside credit card balances. If you have significant medical debt combined with credit card debt, addressing them together through a structured program is often more efficient than negotiating each separately.

Does medical debt affect my credit score the same way credit card debt does?

Less so than it used to. With medical collections under $500 removed from reports, paid collections removed, and a 12-month delay before any medical collection can appear, the credit impact of medical debt has been substantially reduced. That said, large unpaid balances that have been in collections for over a year can still appear and do affect your score.

What if I genuinely cannot afford to pay my medical bills?

Apply for charity care through the hospital's financial assistance program first — this is specifically designed for your situation and can result in significant or total bill forgiveness. If you don't qualify for charity care but still can't afford the balance, negotiate a payment plan with zero interest. Medical providers are generally more willing to work with patients who engage than those who disappear.

Is it worth hiring a medical billing advocate?

For very large, complex bills — a major surgery with multiple providers and insurance disputes — a medical billing advocate can earn their fee by identifying errors and negotiating reductions. For more straightforward situations, the steps above can be handled independently. The key is to engage with the bill rather than avoid it.