Medical bills piling up? How to avoid bankruptcy

A quick search on the crowdfunding site GoFundMe can, at any time, pull up thousands of campaigns in the Garden State by individuals falling behind on medical bills.

In the more dire situations, the clock is ticking before their medical debt leads to bankruptcy — many times connected to a medical issue they did not cause and could never anticipate.

According to a survey published last month in the American Journal of Public Health, nearly 59% of people who filed for bankruptcy between 2013 and 2016 said a medical expense "very much" or "somewhat" contributed to the drastic move. That's more than the percentage of people who cited student loans or divorce, combined.

"It's just as important to pay your medical bills as it is to pay your credit card bills," said Leslie Beck, principal of Compass Wealth Management in Rutherford.

Physicians and hospitals, Beck said, have become more aggressive in their hunt for late payments. When debt is left unpaid, it can be sold to a collection agency, which would then affect your credit reports.

"It's not just people who don't have insurance that end up with these large medical bills," Beck said. "Most times, people that wind up in bankruptcy because of debt are either not aware of the other resources that are available to them, or have used up all of those resources."

The U.S. Consumer Financial Protection Bureau, the survey noted, said medical bills were by far the most common type of unpaid bills sent to collection agencies in 2014, accounting for more than half of all such debts.

Unlike credit card bills, Beck said, payments for medical procedures or visits can be negotiated after the bill is sent in the mail. As a first option, she said, those blindsided by a medical bill should attempt to contact the provider.

"The providers often have room to negotiate these bills," she said.

In New Jersey, charity care is available to patients for medically necessary services at all acute care hospitals, if they meet certain income and asset criteria. Applications are made available at all of the hospitals.

For those too overwhelmed by the size of their medical debt, or confused over why and for what they're actually being charged, there's also the option of hiring a medical billing advocate. They're trained to spot errors and figure out if one's insurance policy is doing its job correctly, as well as negotiate with doctors and hospitals to decrease what's owed.

These advocates generally charge consumers a percentage of the cost savings they accumulate, Beck said.

Bankruptcy, the reach of which can impact one's housing, employment and availability of credit moving forward, should be a last resort, Beck said.

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Contact reporter Dino Flammia at dino.flammia@townsquaremedia.com.