Bridgeport Law Blog

Many Connecticut residents are struggling with high levels of medical debt. It may seem nearly impossible to pay off expensive health care bills. In fact, around 30% of all Americans have over $500 in unpaid medical debt. Medical debt, like other kinds of debt, can have an effect on one's credit score. This means that unpaid medical bills can also lead to challenges when buying car insurance, renting an apartment or seeking a loan.

Of course, medical debt does not need to be reported to a credit bureau. In general, health care providers do not directly report unpaid balances. However, they do sell unpaid debt to collectors, and those agencies regularly report to the credit agencies. If one's medical balances are low, they may not be reflected on a credit report because the most common model does not include amounts under $100. There are various ways people can help to prevent medical debt from being an even greater burden than it already is. They may need to actively engage with or lobby an insurance company to have their bills paid, or they may be able to work out a payment plan with the health care provider.

Many Connecticut consumers know that a bankruptcy stays on a filer's credit report for a long period of time. This is one reason why even people with overwhelming debt continue to resist filing. They are concerned that they will never be able to access credit again and that their credit reports will lead to disaster. Of course, one of the problems is that most people who file for bankruptcy already have significantly damaged credit. They may show very high utilization of existing credit lines, late payments, unpaid bills, or even judgments.

In many cases, people who file for bankruptcy are already ineligible for most new credit lines due to their poor credit rating. Therefore, they may find that in some cases the bankruptcy even improves their credit score, given that it discharges some existing debt. A Chapter 7 bankruptcy lasts on a credit report for 10 years, while a Chapter 13 bankruptcy, which includes restructuring and a payment plan, lasts on a credit report for seven years.

Even when Connecticut patients seek care at an in-network hospital, they may be faced with surprise out-of-network medical expenses. In fact, roughly 1 in 7 patients are surprised by medical bills, according to data on medical billing processes and practices. An analysis of more than 600,000 in-network inpatient admissions found that instances of at least one out-of-network claim ranged from nearly 2 percent of all admissions in Minnesota to nearly 27 percent in Florida.

Out-of-network expenses that may result in some degree of medical debt tend to involve anesthesiology and independent lab services. Specialties representing the most out-of-network professional claims also include primary and non-physician care, emergency medicine, and radiology. The "surprise" bills often occur when a patient goes to an in-network provider and needs services that are inadvertently assigned to out-of-network providers. Unfortunately, patients often have no control over out-of-network care, nor do they always get straight answers when seeking such information.

Most consumers in Connecticut and around the country who owe money to credit card companies carry the debt for more than a year according to a poll conducted by CreditCards.com. Almost a quarter of the consumers who participated said that they had carried such debt for at least three years, and 14 percent said that credit card companies had been charging them interest for five years or longer. The study also reveals how income influences the way consumers handle credit card debt.

While individuals who are struggling to earn a living are more likely to have credit card debt, Americans with higher incomes tend to carry their balances for longer periods. Only about 7 percent of the consumers earning less than $30,000 indicated that their credit card balances were five years old or older, but that figure jumped to 17 percent among respondents earning $80,000 or more.