Over half of debt on credit reports from medical bills
Many Florida residents understand the difficulty of meeting medical expenses, and some of them suffer a negative credit rating when unable to pay those bills. When the Consumer Financial Protection Bureau studied the sources of debt on the credit reports of millions of people, it found that a little over 50 percent of the debt came from unpaid medical bills.
Data from 2014 revealed that medical debt had damaged the credit of over 40 million people nationwide. The CFPB study identified 15 million people with only medical debts on their records. Because insurance disputes often leave accounts unsettled for months or medical providers send accounts to collections in as little as 30 days, the major credit bureaus are shifting how they treat medical debts.
Experian, Equifax and TransUnion intend to wait 180 days before placing medical debts on people’s credit reports. This move should reduce the appearance of debts that were resolved in under six months. When insurance payments go through, the agencies have announced that they will remove the debts. The credit-scoring companies FICO and VantageScore also plan to alter how they handle medical debts because they so often represent the only blemish on people’s records.
Although the financial industry is taking steps to reduce penalties for medical debt, some people need to take action to address their overwhelming financial problems. One possible method might be filing for Chapter 13 bankruptcy. This allows consumers with a regular and reliable source of income to restructure their indebtedness and repay all or a portion of it over a period of either three or five years pursuant to a court-approved plan. Credit card and some other unsecured debt balances that remain at the completion of the plan could be discharged. An lawyer can provide more information in this regard.