Medical debt is one of the leading causes of bankruptcy, according to a recent CNBC report. It is estimated that approximately 643,000 Americans go bankrupt each year due to their medical bills. It can only take one medical crisis for your entire financial situation to implode, leaving you feeling powerless to the bills and collection calls that follow.
However, a new set of rules that recently took effect will make it harder for medical debt to hurt your credit score and give consumers more time to pay their medical debt.
This new change comes after the Equifax hack that caused approximately 143 million consumers to have their personal information compromised following the data breach. The three major credit reporting agencies, including Equifax, now must wait 180 days before an unpaid medical bill can be placed on your credit report.
If an unpaid medical bill is later paid by your insurance provider, this account must be removed from your credit report as soon as it is paid. Previously, medical accounts that were unpaid due to insurance claims being processed could remain on your credit report, causing significant damage to your credit score.
This 180-day waiting period is important because as we all know, insurance claims take time to process before medical bills are paid. Previously, individuals struggling to pay their medical bills or were waiting for their insurance to cover its portion of the bill, found that the delinquent amount was being placed on their credit report within just 30 or 60 days after the missed payment. Now the credit reporting agencies must wait 180 days before putting the unpaid medical bill on your account.
It is estimated that one in every five credit reports include some type of medical debt. Approximately 43 million Americans have unpaid medical debt on their credit reports, but many of these individuals have debt that should not be there due to insurance processing of claims taking much longer than it should.
Not only do insurance claims take time, but many medical bills contain errors that need to be taken off the bill before the consumer can know what the accurate amount owed is. It also takes time for the patient to dispute any inaccuracies and errors and for the medical provider to correct the error and resubmit the bill or claim. The new medical debt credit reporting rule hopes to fix some of these problems, giving consumers more time and help alleviate the effect medical debt once had on consumers’ credit reports.
How is Medical Debt Treated in Bankruptcy?
In bankruptcy, medical bills are treated the same as credits cards. These are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing.
Call me today if you are having problems paying your debts. Having debt makes you stay up at night. It stresses you out. It ruins relationships. I went through it. Boldly, I mustered up the courage to call a bankruptcy attorney and I pressed the restart button in 2008. And even though ten years has passed since I made that decision to restart my life, I never forgot what it did for me and how it helped me start over.
It even inspired me and my law firm to become the largest filers of bankruptcies in the country and in the top two in Florida all from our offices in Orlando and Kissimmee. The Benenati Law Firm has eliminated nearly a billion dollars of debt for its bankruptcy clients, making the firm one of the top twenty filers of bankruptcy in the nation. Remember, we are local in your hometown. We make our hours convenient for our clients and offer free consultations on Saturdays (9:00 a.m. – 3:00 p.m.) along with our normal business hours throughout the week. Go to https://www.407bankrupt.com/ or call 407-777-7777 to set up a free private consultation and learn more information. Because Life Has a Restart Button.
If you have questions on this topic or are struggling with insurmountable debt, we advise sitting down with an experienced Orlando bankruptcy attorney for a free consultation- particularly if you are facing wage garnishment or have a collection lawsuit pending. A bankruptcy attorney can advise you as to all the options available to you and detail the pros and cons of each, giving you the best advise based on years of experience helping those in similar financial circumstances.