It is a widely known fact that medical debt is the leading cause of bankruptcy. Even people with insurance are only one catastrophic illness away from bills they cannot really pay – and hence the need for a financial fresh start through a bankruptcy filing.
Less well known, however, is the negative effect that unpaid medical debts can have on credit reports. This is a common problem for people in the San Antonio area and throughout Texas.
Indeed, it’s a problem all over the country. The three large national credit bureaus – Equifax, Experian and TransUnion – receive reports of unpaid medical bills from debt collectors.
A key underlying question, of course, is why hospitals are so quick to turn bills over to collectors. The Affordable Care Act, otherwise known as ObamaCare, does seek to address this.
The Act contains provisions that will establish rules on what charitable hospitals must do to work with patients on payment options. These hospitals will no longer be able to simply turn collectors loose.
Congress is also considering a bill that would require paid medical debt to be deleted from credit reports. As things stand now, those debts can stay on a credit report for seven years. But the proposal in Congress would amend the Fair Credit Reporting Act to get such debts erased from credit reports across the board, without the lengthy wait.
This is important because the negative effect of medical debt on credit report is a very common problem. The percentage of Americans who have unpaid medical debt on their credit reports may be as high as 40 percent. That is 2 out of every 5 people.
Source: “Incurable financial wounds plague many,” Columbus Dispatch, Mike Wagner and Jill Ripenhoff, 10-9-12