New Reporting Policies May Affect Medical Debt and Credit Scores

 Posted on July 21,2022 in Bankruptcy

Medical debt is a significant issue for many Americans. Large medical bills can be very burdensome, especially for those who are struggling with health issues that may affect their ability to earn an income. In fact, medical debts are one of the most common reasons that people file for bankruptcy. To make matters worse, these debts can continue to affect a person for years, even after debts are paid off or eliminated. A debt that is in collections will often show up on a person’s credit report, lowering their credit score and affecting their ability to receive credit or loans in the future. Fortunately, the credit reporting agencies have announced new policies that may benefit those who have medical debts.

Changes to Medical Debt on Credit Reports

The three credit bureaus that maintain records of people’s debts--Experian, Equifax, and TransUnion--have announced that they are changing some policies related to medical debt. As of July 1, 2022, medical debts that have been paid off will no longer be included on a person’s credit report. This will affect any new debts that are paid off, as well as past medical debts, even those that had been in collections. Because many medical companies are willing to negotiate with consumers to reduce the amount owed, those who have debts may be able to pay them off, ensuring that these debts will not affect their credit score in the future.

In addition to this change, the credit reporting agencies will also be allowing more time before medical debts are included in a person’s credit report. Previously, debts would be reported if they were in collections for more than six months. This period has been extended to one year, giving people more time to address their medical debts and pay them off before these issues affect their credit.

Finally, the credit bureaus will not include medical debts of less than $500 in consumers’ credit reports. This will ensure that smaller debts will not affect a person’s credit, even if creditors take action to collect the amounts owed. This change will go into effect in the first half of 2023.

Contact Our Oakland Park Bankruptcy and Debt Relief Lawyer

Credit bureaus have estimated that these changes will affect around 70 percent of people who have medical debts that are in collections. Those who have significant debts may benefit by taking steps to pay off what is owed, ensuring that they will be able to maintain good credit and avoid future financial problems. However, many people may not have the resources to pay off thousands or tens of thousands of dollars in medical debt. In these situations, bankruptcy may be the best option, and it may allow both medical debts and other types of debt to be completely eliminated. 

At The Elliot Legal Group, P.A., we work with people from all walks of life to help them address debts and return to a position of financial stability. We can help negotiate with creditors or debt collectors to ensure that debts can be paid off through reasonable methods, or we can assist with the bankruptcy process and help a family receive the debt relief they deserve. To learn more about how we can help you address medical debts, contact our Wilton Manors bankruptcy attorney at 754-332-2101.

Sources:

https://www.cnbc.com/select/medical-debt-credit-report/

https://www.equifax.com/personal/education/credit/score/can-medical-debt-impact-credit-scores/