Medical Debt: Restoring Your Finances After Restoring Your Health

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High healthcare expenses place a burden on many American families. Skyrocketing medical expenses, along with other expenses rapidly increasing due to inflationary pressures, are making it difficult for many Americans to keep up with their medical bills. While these debts can negatively affect credit scores, those struggling to make ends meet have options. Nearly all medical debts can be discharged in bankruptcy.

How Medical Debt Can Affect Your Credit Report

Equifax, Experian and TransUnion have collectively decided to change their reporting of medical debt collection data on all consumer credit reports. Effective June 24, 2022 for Experian and on July 1, 2022 for Equifax and TransUnion:

  • Paid medical collection debt will no longer be included on consumer credit reports.
  • The time before unpaid medical collection debt will appear on a consumer’s report will be increased from six months to one year. 

Additionally, in the first half of 2023, medical debt collection accounts under a pre-defined minimum threshold will not be included on consumer credit reports. The threshold amount, which will be at least $500.00, will be published later this year.

Experian predicts that 70% of medical collections will be impacted by these changes. However, the exclusion of the medical collection debt is forecasted to impact only about 9% of medical collection trades and about 2% of all consumers.

All of these changes to medical debt reporting does not mean that the debt will go away. In addition, these changes to medical debt credit reporting does not prevent creditors from taking legal action to recover the debt.

Medical Debt Is Dischargeable In Bankruptcy

Those faced with mounting medical bills should know there are ways to get relief.

For instance, medical debt can be discharged through bankruptcy, allowing for a fresh start without the burden of impossible medical expenses. 

If you have medical debt that you are struggling to repay, contact an experienced New Jersey bankruptcy attorney who can help you understand your options.

We are here to help you.

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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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