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Medical Debt Reporting


Bankruptcy Expert Michael Burrow Weighs In On Major Announcement From Consumer Credit-Reporting Firms

Three of the largest consumer credit-reporting companies are removing medical debt from their customer’s credit reports. Equifax, Experian, and TransUnion recently made the collective decision to change their reporting. Beginning in July, the three companies will remove nearly 70% of paid medical debt from their customer’s credit reports.

What is Medical Debt?

Medical Debt is a kind of debt that an individual incurs due to health care costs and other related expenses. It’s different from other types of consumer debt, because medical debt is usually acquired accidentally or not intentionally. The individuals do not mean to incur debt over medical costs; it happens after they are treated for an injury or an illness.

Approximately 20% of US households have some type of medical debt. When this type of debt shows up on a person’s credit report, it can lower their credit score, reduce their access to credit, or make it difficult to find a job or purchase a home. Medical debt can impact credit reports for as long as seven years after the debt is paid off.

Changes to Medical Debt Reporting

Equifax, Experian, and TransUnion will be making the following changes:

  • Paid medical debt will no longer be included on consumer credit reports.
  • Unpaid medical collection debt will not appear on a consumer’s credit report for one year (an increase from six months). This should allow consumers more time to address their medical debt with insurance and healthcare providers before it’s reported.
  • In early 2023, medical debt collection accounts that are less than a pre-defined minimum threshold will not be included on consumer credit reports. That threshold amount is expected to be $500 or less.

Experian implemented the changes on June 24, 2022. For Equifax and TransUnion, the changes are effective July 1, 2022.

How Will Medical Debt Reporting Impact Bankruptcy Proceedings?

While the changes in medical debt reporting have been praised as an important step to support customers after the Covid-19 pandemic, the reporting changes may not be a positive move for those involved in bankruptcy proceedings.

“From a bankruptcy perspective, the biggest impact will be that consumers cannot rely on credit reports to accurately reflect their medical debts and medical debt collections when filing for bankruptcy,” says Burrow & Associates’ bankruptcy expert Michael Burrow.

“We have always informed clients of this in the past, since many medical providers do not report to the credit reporting agencies and medical debt collections do not show up on the credit report until they remain unpaid for six months. Now, medical debt collections will not show up on the credit report for one year if it remains unpaid. Debtors will need to be extra vigilant about informing bankruptcy law firms of medical debts and medical collection debts that remain unpaid for less than one year,” says Burrow.

How Many Consumers Will Be Affected? 

Credit-reporting companies Equifax, Experian, and TransUnion serve more than 200 million US adults every month. That’s more than 1.6 billion credit accounts. According to the Consumer Financial Protection Bureau, approximately 43 million US adults are carrying $88 million in medical debt on their credit files.

Experian is predicting that about 70% of medical collections will be impacted by the recent changes.

Have Questions? Contact Burrow & Associates’ Experienced Bankruptcy Team

If you have questions about the changes to medical debt reporting, please reach out to our team of experienced bankruptcy attorneys. Our team at Burrow & Associates would be happy to help. You can reach us at (678) 323-2394 or via our online contact page. Our law firm offers free initial consultations and has six convenient offices around metro Atlanta.

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