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Medical debt will stay off credit reports longer under changes

When a medical emergency occurs people generally go to a medical professional for help. In these situations, the last thing on many Michigan residents' minds is the cost of the care. They often just want the doctors, nurses and other medical professionals to do whatever they can to fix the issue and get them on the road to recovery.

Following the emergency, however, the medical bills will start coming in. Often these bills can be astronomical -- even for simple medical issues. Even people with health insurance can be surprised to see how much they owe following a medical emergency. Many people cannot afford to pay these bills or are locked in a struggle to get an insurance company to pay for them.

Therefore, the bills pile up and become past due. Eventually, these bills hurt people's credit scores and are handed over to aggressive collection departments. However, studies have shown that past due medical bills are not a good judge of creditworthiness for consumers since disputed claims often take a while to be resolved. But, medical debt will still affect a person's credit score if left unpaid.

Recently, however, the three major credit reporting companies have announced changes to how medical debt will affect a person's credit score. They have said that they will not place unpaid medical bills on a person's credit report unless they have been left unpaid for 180 days. This, the companies say, will give people and their insurance companies time to resolve disputes. If a bill is eventually paid by an insurance company, the credit reporting companies say that it will be removed from a person's credit score.

These changes are expected to be in full effect by June 2018. Until these changes are implemented, Michigan residents may want to explore all of their debt relief options when struggling with medical debt and other consumer debts. In some cases, a consumer bankruptcy may be the best way to get a fresh financial start.

Source: Kiplinger, "Relief From Painful Medical Debt," Lisa Gerstner, June 2015

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