Making the Right Financial Moves When Medical Emergencies Arrive

Today I have another guest post, from personal finance blogger Josh Wilson at

Medical bills can be a nightmare. A night in the emergency room or bad news from a doctor can mean thousands of dollars taken from your bank account or even harm to your credit score. But, since medical bills don’t go straight to your credit score, there are some moves to make within the first 90 days after an emergency occurs.

The Consumer Financial Protection Bureau reports that about half of all collection accounts on credit reports actually come from medical debt. The report also said that a single collection can cause a decent credit score to fall about 100 points. Many patients don’t even realize how quick a medical bill can damage their credit.

Other misconceptions include:

  • Making payments on a medical bill can still send it to collections
  • Some medical bills end up at collections because a patient isn’t really sure what they owe
  • Collection accounts can damage a credit score, whether or not it is medically related
  • Paying off a credit agency may not even fix your credit score

So what can be done to avoid all of this?

Prioritizing Your Monthly Expenses

Not all bills are bills are created equal and certain bills are certainly more of a priority than others. The most common example, of course, would be to pay your electric bill before your cable bill, as one only works with the other, but let’s discuss some more complex situations.

Quicken Loans lists common bills to be paid in order as groceries, household necessities (soap, toothpaste), shelter (mortgage), insurance, car payments, phones, loans with collateral, internet and cable. In addition, anything not on this list, such as subscription services, should be the first to go when cutting expenses.

In addition to properly prioritizing your bills, also consider how things like groceries and households necessities can be cut back as a whole. Is it possible to find similar items at a dollar store or from an off-brand company? Enough small reductions can add up to help with a big bill.

What to Do If You Can’t Pay a Bill

If you can’t make a payment on a credit card or other bill, the worst thing you can do is just skip the bill. This will only make it harder to catch up on and there could be other consequences as well. Your creditor can even take actions like charging a late fee or reporting the incident to the credit bureau if payment isn’t made in 30 days.

Credit card issuers don’t withhold late payment penalties just because you made an effort to pay. There is no one-dollar payment allowance, so the minimum must be paid. On some credit cards, this could be around $25, but it could also be much more than this.

In order to prepare for not being able to pay a future bill:

1. Talk to your creditor

If more money isn’t possible and you can’t make the minimal payment, it’s time to talk to your creditor. Let them know that it’s a one-time occurrence and schedule a date when you can make the payment. Some creditors will allow for you to extend your due date or they may even waive the late fee.

That said, not every creditor is sympathetic. If that seems to be the case, take another look at where you might be able to trim your budget. For student loans, however, new laws have allowed for young people to put their loans in forbearance, which means they can pay a minimal amount based on income, or they can go six months without making a payment. You should know that only federal student loans are guaranteed forbearance by the Department of Education. In contrast, private student loan forbearance policies change on a company to company basis. Again, it is worth reaching the policies of your creditors before emergency strikes.

2. Be precautious when juggling your bills

Automatic payments are meant to be easy, but if you’re unclear which charges are hitting which accounts on which dates, take some extra time to look at previous months to check the withdrawal amounts. While you’re examining your monthly expenses, take another look at how you might be able to cut expenses.

Can you cut cable all together or request a cheaper plan? Can you ask your car insurance company for a lower rate or work with your health insurance company? Are there personal bills, such as a hairdresser or barber, which can be skipped temporarily? Again, every little thing helps when trying to work off medical bills.

3. Make more money to pay the bills

Assuming the medical condition or bill doesn’t keep you out of work, perhaps it’s possible to gain some extra shifts or figure out a way to make more commissions at your job. If that’s not a possibility, perhaps freelance work is an option.

UpWork invites writers, virtual assistants, programmers, designers, and more to create free profile and there are literally tens of thousands of jobs listed at all times.

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