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Helping People Get A Fresh Financial Start to Regain Financial Independence

Helping People Get A Fresh Financial Start to Regain Financial Independence

How does medical debt affect my credit?

On Behalf of | May 23, 2022 | Bankruptcy

Most people know that unpaid debt goes on our credit after 30 days of nonpayment. Of course, some creditors may take way longer to report unpaid balances, but they can begin reporting late payments at 30 days. However, beginning this summer, those of us with medical debt on our credit report will notice that it has disappeared.

Credit reporting deal

The nation’s three leading credit bureaus, TransUnion, Equifax and Experian have all agreed to begin removing cleared medical debt starting in July. In other words, if you paid those past-due medical bills, those negative credit marks will start disappearing in July.

By the numbers

According to the U.S. Consumer Financial Protection Bureau last month, this should help Americans battling nearly $90 billion in medical debt improve their lives by making credit available. And, the credit bureaus claim that this will wipe out 70% of negative medical debt reported on Americans’ credit reports. This financial lifeline will allow many to finally access a new vehicle or finally, buy an Indianapolis, Indiana, home.

More time for unpaid too

Since 2017, unlike other debt, medical debt could not be reported to credit bureaus for at least 6 months. Now, the three credit bureaus will move that delay to 12 months, and in 2023, all three credit bureaus will stop reporting medical debts under $500.

Medical debt is a real issue

According to Healthcare.com, every living generation has dealt with medical debt harming their credit scores, including over 50% of Millennials. In fact, both Millennials and Gen Zers have admitted to skipping their rent or mortgage payments because of their medical debt, which can also harm their credit score, further harming their Indianapolis, Indiana, credit profile.

Lawsuit still possible

It is still important to note that these changes do not help those who have significant amounts of medical debt. And, more and more debt collectors and hospital groups are taking patients to court to garnish wages and seize assets. This is when a bankruptcy filing is useful to protect your assets and stop these predatory practices because it immediately halts all court proceedings and allows for the safeguarding of some Indianapolis, Indiana, assets.