Changes are coming to when medical debt appears on credit reports

While the old adage goes, "Always expect the unexpected," in reality there are many things people in Massachusetts can't always see coming down the road. For example, a person could be seriously injured in a sudden car accident. Or, perhaps a person goes to their doctor for a routine check-up, only to find they have cancer. In other cases, a person may have a chronic illness, but suddenly be laid off from work, meaning they no longer have insurance to cover their medical costs. In fact, around 50 percent of all unpaid debt that shows up on credit reports involves medical bills.

However, beginning in September, the three main credit bureaus will institute a waiting period of six months before a person's unpaid medical bills can show up on their credit report. This change will provide people with the time needed to resolve any insurance problems or other issues that may cause a delay in their ability to pay a medical bill. Moreover, once a person's insurance has paid the medical debt owed, this debt will be taken off one's credit report.

This measure will provide some standardization to when medical bills go to collections. For example, as it currently stands, some providers send an unpaid bill to collections if it is one month past due, while others won't send an unpaid bill to collections until it is two months past due. In addition, this measure will be of help to the 15 million individuals in the United States whose only ding on their credit report is due to an unpaid medical bill. Moreover, a representative from FICO reports that individuals with an unpaid medical bill are not as apt to default on what they owe, when compared to other types of debt. This means that just because a person has an unpaid medical bill doesn't necessarily mean they are a poor credit risk.

This may be good news for some debtors, but even with the extended waiting period, some may find that they simply cannot pay their debt and are in need of serious debt relief. For example, filing for bankruptcy gives a person the opportunity not just to wipe out medical debt, but their other debts as well, so they can have a fresh financial start moving forward.

Source:, "Medical debt? Big changes are coming," Michelle Andrews, July 13, 2017

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