Medical debt may affect credit rating
On behalf of Bankruptcy Law Firm of Clare Casas on Thursday, February 19, 2015.
Florida residents may know that medical debt affects the way lenders perceive a borrower's repayment risk when making a loan. In fact, more than 15 percent of credit reports contain a medical debt. One policy analyst pointed out that when consumers contemplate purchasing a large item such as a house or a car, it is a calculated assessment of their financial capability to repay the loan, but medical debt is unexpected and perhaps overwhelming.
A few of the leading credit agencies have modified the way that they score medical debt, and many observers feel that these type of obligations do not serve as a useful predictor of whether a consumer will pay back a loan. However, unpaid obligations still appear, and they can prove costly.
Consumer advocates caution that people should stay abreast of items listed on medical bills after being hospitalized or undergoing medical care. Documenting issues with unpaid bills with both the insurer and medical provider is important. In many cases, some items are listed incorrectly, and the patient needs to address that. One advocate noted that taking issue with a debt before it goes to collection is often easier than trying to have the debt removed from a credit report. Many patients, however, may be too ill to challenge credit reports or erroneous medical bills, while others have difficulty understanding them. Others lack resources to pay the bill if it is correct. This may affect the patient's chance of getting credit.
Many people find overwhelming financial obligations very difficult to handle. Speaking with an attorney who has experience in bankruptcy matters may be helpful. There are several eligibility and other requirements associated with personal bankruptcy that the attorney can outline.
Source: Bankrate, "How will unpaid medical bills hurt credit?", Janna Herron, Oct. 15, 2013