All three credit reporting bureaus (Equifax, Experian and TransUnion) have voluntarily decided to change how they report medical debt collection information on the consumer credit reports they produce. The changes mean that information about medical debts already paid will no longer be included on credit reports. This removal of information about medical debts repaid after they go into collection will eliminate tradelines that will potentially negatively impact someone’s credit score. In addition, information about unpaid medical collection debt won’t appear on a consumer’s report until one year after it goes into collection. This is an increase of six months before medical debt collection information is reported. This means that consumers will have a longer period of time to get medical debts paid before they appear on a credit report and create negative impacts.
The credit bureaus have also decided that starting in the year 2023 they will not report any medical debt collection information below some minimum threshold amount. The bureaus will announce sometime later this year what that minimum amount will be but they say it will be at least $500.00.
Experian predicts that 70% of medical debt collections will be affected by these credit reporting changes. However, since small amounts of medical collection debt represent such a small amount of the debt reported on credit reports, the changes are predicted to impact only about 9% of the medical collection tradelines on credit reports and only about 2% of all consumers. Credit card and student loan debt, along with car loan defaults still represent a larger proportion of credit report information.
These credit reporting changes, while positive steps forward, won’t mean that the debt is not owed or that debt collection won’t continue. Medical debts are not usually the primary reason people need to file bankruptcy but they often indicate larger problems with unpaid debt. If you have debt, medical or otherwise, that you’re unable to pay in full, contact us to discuss your bankruptcy options.