Although your struggle with unpaid debt may feel like a lonely road to walk, you are not alone. In fact, if the main reason for your credit problems is unpaid medical debt, you are one of about 43 million in New Jersey and across the country. The Consumer Financial Protection Bureau reports that this figure means there are delinquent medical bills included in about one in every five credit reports.
It may not be much comfort to know you are one of millions struggling with medical debt, especially if the burden has affected your life in many negative ways. Since medical debt is not always predictable, you may not have been able to prepare your finances to cover the bills, particularly if the debt arose from a medical emergency or accident. However, there may be a light at the end of the tunnel.
The problem with medical bills
If a doctor, hospital or medical lab sends you a bill for services, you probably wait for your health insurance to determine the amount it will cover. Typically, once the insurance company covers its share, the health care provider will send you a revised bill. However, insurance companies and speedy processing do not typically go together, and if you wait longer than 30 days, there's a good chance the medical provider will send your bill to one of the three credit reporting agencies.
Because of this, you may have been shocked to discover your credit score had dropped because you were late paying the bill. In fact, you may have been late paying because you took the time to dispute a bill that seemed wrong to you. Nevertheless, the credit reporting agencies routinely post those to your credit score immediately upon receiving them. Even if your insurance finally came through and paid the claim, the negative mark on your credit score remained.
Changes in the law
Once a debt appears on your credit score, it usually remains for seven years. This may damage your opportunities to seek a mortgage, obtain a car loan or even qualify for certain jobs. A recent lawsuit settled in another state is a serious game-changer for those who face this scenario. The settlement makes the following stipulations:
- Equifax, Experian and TransUnion must wait 180 days before adding medical bill delinquencies to your credit report.
- The three reporting agencies must immediately remove any medical debt from your report if your insurance pays the balance due.
- Although changes in the rules are not retroactive, the credit reporting agencies have agreed to begin removing any medical delinquencies reported within the past 180 days.
This is great news for those with pending or recent medical debt. However, if your debt is older than 180 days, your financial situation may be dire. While the new rules may not help you in your current situation, you may learn about your other alternatives by seeking the counsel of a bankruptcy attorney.