The Consequences of Medical Debt on Your Credit Score

The Consequences of Medical Debt on Your Credit Score

Medical bills, like any unpaid debt, can do major damage to your finances and your credit score. Nearly 3 in 10 Americans, even those who had insurance, had an unpaid medical debt sent to a collection agency, according to a recent Consumer Reports survey.

According to the National Consumer Law Center, medical debts are a huge portion of the negative information in credit reports, making up about half of debt collection amounts on these reports and affecting 43 million Americans. Having a low credit score has wide-reaching effects by making it more difficult and expensive to borrow and by lowering your chances to obtain good employment, housing, and insurance.

Even for those who have always been financially stable, being hit with a major medical problem can have bills mounting up quickly, to the point where they can no longer be met.  People then often take on additional credit-card debt to cover mounting medical bills; savings are depleted, and people wind up being unable to pay for necessities such as rent, food and utilities. As a result, medical bills have become the most common cause of filing for bankruptcy in Ohio.

If you find yourself overwhelmed with medical debt and bills you cannot pay, the skilled and seasoned Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer can help. We understand that financial problems can happen to even the most well-intentioned people.  We offer a free consultation to evaluate your financial situation and to come up with a debt-relief plan that’s best for you.

Delaying can only make your situation worse, so contact us online or call our offices to set up your free consultation today.

Medical Debt in Ohio

Medical debt is treated differently from debts like credit cards or student loan debt. As a rule, unpaid medical bills are sent to a debt collector, and if the agency can’t collect, it reports the debts to the credit bureau.  This can significantly damage your consumer credit scores, as one medical bill can cause a drop between 50 to 100 or more points.

Fortunately, because of this process, it may take more time for an unpaid medical bill to show up on your credit report and hurt your credit score.  In addition, there are also new regulations that provide more time for you to resolve problems with healthcare bills or come up with a payment plan before they can have an impact on your credit standing.

In September, 2017, Ohio’s rules changed so that the big credit agencies no longer report medical debts that are less than six months past due on credit reports and will also remove medical debts if the debt is later paid by insurance. Also, unpaid medical bills that eventually are paid by the insurer must be removed from your credit report.

The three major credit reporting agencies—TransUnion, Experian, and Equifax—now have to wait 180 days before putting an unpaid medical bill on your credit report. This allows you more time to dispute problems with insurance coverage or charges from a healthcare provider.

Ohio has a statute of limitations of six years on debt, counted from when a debt became overdue or when a borrower last made a payment, whichever happened more recently. Creditors cannot sue a debtor for debt collection purposes after six years have gone by.

What to Do About Medical Debt

If you’re struggling with medical debt, here are some suggestions:

  • Monitor your credit reports and your EOBs (Explanation of Benefits) carefully. Contact the provider and/or your insurance company immediately if you find errors or if bad debt that is eventually paid doesn’t disappear. If you find a medical debt less than six months past due on your credit report, send a dispute to the credit reporting agency. Check credit reports on a yearly basis for free at annualcreditreport.com. Delinquent medical bills can take up to seven years to drop off your record, though the impact on your credit score decreases over time.
  • Don’t put the debt on credit cards. Interest rates are very high, and it will look like regular debt to creditors, so any protections associated with medical bills won’t apply.
  • Negotiate a settlement. If you are disputing an insurer’s denial, contact the healthcare provider to ask for more time before it sends your unpaid bill to a debt collector. Providers may offer installment payment options with little or no interest, or they may accept a lesser amount rather than go through a lengthy dispute or have you file for bankruptcy. If you can’t negotiate on your own, consider a consumer advocate such as a Health CPA, Medical Cost Advocate, or Insurance Negotiating Service.
  • Prevent reporting. Try to get the original provider to pull the debt back from collections so you can pay them directly and the account will not be reported. If a bill does get sent to a collection agency, ask them not to report it if you pay it right away. If you feel the situation is highly unfair, you can file a complaint with the Consumer Financial Protection Bureau or the Ohio Attorney General.
  • Try to get patient financial assistance. Hospitals have patient assistance programs: charity care (at no cost to you) and discount programs based on federal poverty guidelines.  They are designed to be applied for before you receive the treatment, but you can still apply for them after you receive your first medical bill. Nonprofit hospitals must devote a portion of revenue to charity care to qualify for their tax breaks.
  • File for bankruptcy protection. Bankruptcy is a last resort for resolving medical debt, but one that many people are forced to choose.

Contact Us For Help

If you are having problems with medical or any other kind of debt, the experienced and compassionate Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer offer a free consultation to review your entire financial situation.  We examine your income, your debts and your goals, and make sure you are aware of all your options.   We understand what you are going through and will walk you through the process.

Delaying can only worsen your situation, so contact us online or call the Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer today for your free consultation so we can determine what debt relief solutions will work best for you.

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