Reforms to credit reporting methods might help some consumers in Tennessee. Their medical debts that went to collections when insurance companies took too long to pay could be removed. As part of a settlement with state attorneys general, three major credit bureaus agreed to wipe clear medical debt collections that insurers eventually paid. The settlement also establishes that credit bureaus will wait 180 days before placing unpaid medical bills on people’s credit reports.
Data from the Consumer Financial Protection Bureau indicate that the credit reports of 43 million people include collections for medical bills. The credit reporting reforms, however, will not help many of those people. Less than 8 percent of credit records with medical bills show them as paid. An unknown portion of this small percentage might be eligible for removal because of belated insurance payments.
For people with eligible debts, a staff attorney for the National Consumer Law Center recommends that they check their reports carefully. They need to ensure that the insurance-paid debts come off. If they do not, people need to contact credit bureaus and request an appropriate update to their records. Clearing medical bills from the credit history could substantially benefit their credit ratings. Even one bill that went to collections, regardless of whether it was eventually paid, could reduce a 680 FICO score by 40 points. People with higher ratings face even harsher consequences. A 780 point score could plummet 100 points.
Someone concerned about mounting debts could speak with an attorney about how to approach debt relief or possibly halt a foreclosure. An attorney could discuss the possibility of filing for bankruptcy to help the client make a fresh financial start.
