Relief may be on the way for consumers struggling with medical debt. As of July 1, 2022, the three largest credit bureaus, TransUnion, Equifax, and Experian, are removing cleared medical debts from consumers’ credit reports.
What this means is if the consumer has paid his or her medical bill in full, and that debt is still plaguing his or her credit report, this negative mark will now be removed. This announcement comes as part of a larger endeavor by the Biden administration to either decrease or eliminate medical debt as part of government lending determinations.
A Consumer Financial Protection Bureau (CFPB) report recently showed that millions of American consumers are struggling with approximately $88 billion in medical debt. Medical debt can have some consequences on consumers, especially after they pay their debts that were sent to collections. Having these accounts on credit reports can hurt them when it comes to applying for financing for housing, loans, and credit cards. Those problems can soon go away with the elimination of these marks on consumers’ credit reports.
It is estimated that this move will remove an approximate 70 percent of negative medical debt marks. The following changes have been made as of July 1, 2022.
- Medical debt that was in collections and was subsequently paid will no longer be on consumer credit reports.
- Consumers will have additional time before their unpaid medical debt shows up on their credit report.
- Any unpaid medical debt that is currently in collections for one year will be reported on credit reports. Previously, debt that was in collections for six months was reported.
- During the first half of 2023, Equifax, Experian, and Transunion will no longer include medical debt in collections when the amounts are under $500.
This change is seen as a positive move for consumers since medical debt can be a major stressor for many of them throughout all walks of life. According to a recent Healthcare.com study, all living generations say that their medical debt has destroyed their credit scores. The highest category of consumers is millennials at 52 percent saying their credit scores are suffering due to medical debt. As a result, many consumers say they have skipped paying rent or mortgage payments due to their looming medical debt. Unfortunately, by doing this, they are only damaging their credit scores even more.
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Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken, P.A. website at www.miamibankruptcy.com.
