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Medical debt and credit reports

On Behalf of | Oct 1, 2023 | Credit Card Debt, Personal Bankruptcy

it is not uncommon for patients in Michigan hospitals to incur charges totaling thousands of dollars or more. If you fail to pay an outstanding balance, a service provider could report that debt to credit agencies. However, a new proposal would limit the impact medical debt could have on your credit score and creditworthiness.

Medical debt would stay off your credit report

If the proposal is passed, medical debt would largely remain off of your credit report. Therefore, lenders, landlords and other parties wouldn’t be able to use an unpaid hospital or doctor bill against you. According to those who study this issue, unpaid medical bills generally don’t reflect a person’s ability to pay other types of debts on time. Ultimately, the changes to current regulations may make it easier for you to find a job or adequate housing.

How to manage your debt now

You may be able to eliminate some or all of your existing medical debt by filing for personal bankruptcy. depending on your current circumstances, you may be able to eliminate or reduce your debts without ceding your home or retirement funds to creditors. If you have existing debts of $500 or less, you may be able to have them removed from your credit report by contacting the credit agencies yourself.

If you are struggling to repay medical, credit card or other types of debt, bankruptcy may be worth looking into. When you file, you’ll receive a stay of creditor collection activities, which may provide the leverage needed to negotiate a favorable payment plan. After debts have been discharged, lenders cannot call, write or take other actions in an effort to collect a previously outstanding balance.