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Medical debt can negatively affect credit for years

There may be many who are not aware that old medical bills are viewed by creditors just as other unpaid debts, and as a result, they can have a negative impact on one's credit score and financial well-being far into the future. There has been legislation introduced that may provide some relief for those struggling with medical debt, but the measure has not progressed far at this point. Understandably, the economy has made it hard for thousands of families, and there may be a proportional number in Washington who might be struggling just to pay their regular obligations.

One man had recently shared his struggles in trying to resolve a bill relating to a medical issue he suffered a few years ago. He does have medical insurance, and all but $640 was paid by his carrier. He has stated that his insurer assured him that he would only be responsible for a portion of the amount, but he was contacted repeatedly by a collection agency that was contracted to recover the amount in full.

The 67-year-old man was unaware that the creditor had reported the default to the credit-reporting agencies until he attempted to transfer some of his outstanding credit onto a lower interest card. At that point, he was informed that his rating had been negatively affected by the medical bill, and now he is no longer qualified for the preferred rates. At this point, he is adamant that he will not pay the full amount, as he believes he does not owe it. Regardless, the entry on his credit history will likely remain until 2019.

The legislation that has been proposed would require any medical debt that has been paid to be removed from credit reports within 45 days of satisfaction, which could possibly result in an improvement in a consumer's rating. However, the proposal has not progressed, and for now, the bills will continue to be reflected on the history for the stipulated time, regardless of payment. One option that Washington consumers may consider is a bankruptcy filing. While old debt can linger and impact the credit worthiness of a consumer for years, a bankruptcy filing may allow the petitioner an opportunity to rebound afterward with a better score than before while providing a fresh financial future.

Source: post-gazette.com, "Medical debt can have long term consequences", Tim Grant, June 11, 2014

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