Is medical debt relief on the way?

Is medical debt relief on the way?

On Behalf of | Jun 15, 2022 | Bankruptcy |

Medical debt can be unexpected and soul-crushing. It is the double whammy of our system that can feel like you are being punished simply for getting sick. And, even when you figure out a way to pay off that debt or settle it, that debt stays on your record as a negative mark because it was not paid immediately. But, for some of us with medical debt, there is some relief on the way.

Medical debt can hurt your credit score

First, before talking about relief, it is important to understand why debtors need it. Bluntly, medical debt hurts your credit score the moment it hits your credit because, since 2017, medical debts cannot be reported until they are at least 6 months old. This means that, when it is delinquent, it is reported as over 90-days late, which is a negative mark on your credit report that stays on there for at least seven years, even if it is paid.

This can affect your ability to any type of loan, like car, home, personal, etc. And, even if you can get loan approval, a negative mark on your credit will likely increase the interest rate, which in today’s higher interest rate environment, could make those loan payments unaffordable. In an ironic twist, according to several studies, the mental tax and stress from these debts can cause additional medical problems, increasing suffers’ medical debt load.

Soon, paid-off debt will disappear

Recently, the three largest credit bureaus, Equifax, TransUnion and Experian announced that in July, they will begin removing paid-off medical debts from consumer credit reports. This eliminates that bad mark from your credit and rewards paying off that debt. For those that may not think this will make a significant impact in the lives of Americans, according to the Consumer Financial Protection Bureau, as a nation, we are batting about $88 billion in medical debt.

Additional relief

In addition, beginning July 1, even accounts that were in collections, when they are paid off, the entire account will be removed. In addition, the amount of time medical debts must remain unpaid before being reported to the credit bureaus will also be doubled. This means that you will have up to 12 months to negotiate your bill down and pay it off before they can report the medical debt on your credit report. Plus, beginning in 2023, medical debts under $500 will no longer be reported by Equifax, Experian or TransUnion

This relief is needed

According to a survey done by, medical debt affects every living generation. However, more than half of millennials are struggling with medical debt, including those in Williamsville, New York. Of course, these new rules will not stop medical provider lawsuits or unpaid medical debt over 1 year old. This is why bankruptcy is still the preferred option for many to get a financial fresh start.