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Unpaid Medical Bills and Your Credit Score

Medical debt presents may present a particular problem for consumers. This type of debt is significantly different than other types of debt that a consumer may need to deal with, such as credit card bills or an auto loan. Not only is this debt incurred when a debtor is in need of medical care and in a vulnerable position, but these bills are quickly turned over to collection agencies by hospitals, medical providers and doctors.

According to the Commonwealth Fund, a nonprofit health care research group, it is estimated that 14 million Americans are struggling with medical bills that they believe were sent to collection agencies in error. A study by the Federal Reserve also found that almost half of the collection accounts that appear on consumer credit reports are for unpaid medical bills.

Let's take a look at a few of the factors that make it difficult to track and manage medical bills, leading to a negative impact on one's credit score.

Medical bills are often hard to track. Not only is the debtor in a time of emotional and/or physical turmoil when these expenses are incurred, but the bills may come at irregular intervals, sometimes months after a procedure takes place. It may also be hard for a debtor to know what has been paid by the insurer and what he or she is expected to pay.

When a medical bill goes unpaid, the hospital or medical facility will rarely report it to a credit reporting agency but will instead sell the unpaid bill to a collection agency. Sometimes bills go to collections even while a patient is in the midst of discussions with the insurer or provider. Once medical bills go to collections, the collection companies will report the unpaid balance to credit reporting agencies. From there, it may be difficult to discern where an unpaid bill has come from. The information on one's credit report may be vague and hard to understand. These unpaid bills that are in collections may prove to be extremely damaging to one's credit score. Even if the patient pays the bill, the negative mark on his or her credit report may remain for up to 7 years.

Do you have unpaid medical bills that are negatively affecting your credit score? Are you considering bankruptcy or another form of debt relief to eliminate your medical debt? Jacoby & Jacoby can offer you legal counsel related to all of your bankruptcy and debt relief needs. The firm, located in Long Island, represents debtors throughout the area in these important and often complex cases, providing experienced and dedicated counsel.

Contact a Long Island bankruptcy lawyer at the firm today for a confidential review of your case.


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