Can medical debt appear on your credit report?

You may have read in the past that medical debt does not appear on your credit report. That isn’t entirely true. The reality is that the types of medical debt that may appear on your report could vary, and it is possible that at least some charges could go to collections and end up affect you because they’re past due.

There is a reason why this myth that medical debt doesn’t go on your credit report has developed, and that is because virtually no medical office or hospital will report the debt directly itself. Instead, if the facility has to sell off the debt, then the collections agency may report the debt to the credit bureaus. There was also a law passed that delays how long medical bills must be held before being reported to a credit bureau. According to that law, unpaid medical bills must be delayed at least 180 days before being reported to the credit bureaus.

A longer waiting period is helpful for those in debt

A longer delay in how long a facility has to hold a debt is helpful in preventing people from having their credit affected. With 180 days to set up payment plans or to find a way to pay for medical bills, many are able to avoid long-term credit damage.

Another beneficial factor is that the credit bureaus weigh medical debt differently. As many as 20% of Americans have medical debt, but credit-scoring companies know that medical debt doesn’t necessarily predict the likelihood of failing to pay other debts. As a result, they have adjusted their formulas to reduce the impact of medical debt when it occurs.

What can you do if medical debt does impact your credit?

If there comes a time when medical debt takes over and you can’t see a way out, one possible option is to pursue a bankruptcy. Bankruptcy can be beneficial, because it can clear all of your medical debt (Chapter 7) or help you get onto a good payment plan (Chapter 13). Your attorney can give you more information on how bankruptcy can help you get back on track.