Bad News for Medical Debt and Your Credit Report
For years consumer advocates have been pushing to leave medical debt and bills off of credit score reports, because getting sick shouldn’t be a factor in whether someone is worthy of getting credit. Americans celebrated when, in January of 2025, a rule was finalized by the Consumer Financial Protection Bureau (CFPB) ending the inclusion of such debt and barring creditors from using that data when making lending decisions. (The information was still available to entities who were not considering loans, such as landlords and/or employers). The celebration, however, was short-lived, as a Texas federal court ruled that the CFPB had made a decision outside its jurisdiction, and vacated the regulation.
Now What?
There are 14 million Americans who owe at least $1,000 in medical bills, and another three million who owe more than $10,000. If you are one of them, you know just how difficult it can be to get out from under medical debt. Over half of those experiencing medical debt have already been turned over to collections—making them more susceptible to having to file for bankruptcy. Once the debt is on your credit report, it hangs around for seven years, just like any other debt.
The Good News
There are a few things to smile about. For one, medical debt won’t be added to your credit report unless it exceeds $500. Also, if you’ve paid off the collection agency for debt, that won’t show up on your report either. Additionally, unlike other debt, you have a full year to address medical debt before it appears on your credit report.
Addressing Medical Debt
When you get a whopping medical bill, there are a few options available to help you stay on top of the debt:
- You can negotiate with the provider to find waste or unnecessary treatments, or to come up with an amount that’s within your means. Particularly those meeting income requirements may be able to take advantage of a financial hardship policy.
- You may be able to work out a payment plan that allows you to chip away at the bill each month—and it’s possible you could even do so with an interest-free arrangement.
- You may be eligible for help from a non-profit organization such as the Patient Advocate Foundation or Undue Medical Debt. For those who qualify for Medicaid, retroactive payments are a possibility.
If Bankruptcy is the Final Option
Hundreds of thousands of people are forced to file for bankruptcy annually due to medical debt. That’s two- thirds of all bankruptcy filers. If you find there’s just no other way around it, bankruptcy may be the best option going forward. The dedicated Miami bankruptcy attorneys at The Law Office of Julia Kefalinos can help. We will be frank, fair, and non-judgmental. To discuss your situation, schedule a confidential consultation in our Miami office today.
Source:
cnbc.com/select/medical-debt-credit-report/
