Old medical debt on a credit report can hurt you and filing bankruptcy in Oklahoma can be helpful. When it comes to credit scores, medical debt can play a significant role if it is not addressed promptly. The process of understanding how medical debt impacts your credit score and exploring bankruptcy as a potential solution can be complex and daunting. Read below to gain insight into the issues of medial debt and why bankruptcy in Oklahoma is useful.
Understanding Old Medical Debt
When a medical bill is not paid, the healthcare provider may attempt to collect the debt for a certain period. If these attempts are unsuccessful, the provider may eventually write off the debt as a loss or sell it to a collection agency. Once in the hands of a collection agency, the debt is still the responsibility of the original debtor, but it is now older and potentially more difficult to resolve.
Federal Regulations On Medical Debt Reporting
The Fair Credit Reporting Act dictates the longevity of debt on credit reports, capping it at seven years for most kinds of collection accounts, including medical debt. Changes in credit scoring models have altered the landscape slightly by differentiating between medical and non-medical collections, giving less weight to medical debt. Additionally, a grace period of 180 days is now standard before medical debt appears on your credit report, affording you time to sort out payments with insurance providers and medical offices. There are other fair debt collections statutes on the books and this new requirement is intended to strengthen consumer protections.
Some Medical Debt Will No Longer Be Reported
Recent legislation passed by the federal government makes some changes to how medical debt is reported. In early 2023 credit bureau can only report certain types of old medical debt. This reporting applies to the three major credit bureaus. The legislation targets old medical debt that has since not been paid. It also targets old medical that is under a certain threshold amount. If the balance started at less than $500.00 and remains unpaid the debt is removed from the three credit bureaus. This does not mean the debt is forgiven but only that its does not show up on the credit bureau as negative credit. As far as medical entail debt over the threshold amount of $500.00 it will remain as a collection balance on your credit report.
Bankruptcy’s Role In Addressing Medical Debt
Bankruptcy can serve as a pathway to mitigate the burden of medical debt, offering legal solutions based on individual circumstances:
- Chapter 7 Bankruptcy: This form of bankruptcy may allow you to discharge all your medical debt. It’s designed for individuals with limited income and resources, providing a way to eliminate various unsecured debts, including medical bills.
- Chapter 13 Bankruptcy: This option restructures your debt into a manageable repayment plan, which usually lasts between three to five years. If you complete the payment plan, the remaining unsecured debt, including medical bills, may be discharged.
Is Bankruptcy Right For Me
Bankruptcy is a great solution but its not for everyone. The first consideration is which bankruptcy do you qualify for. To qualify for a chapter 7 there is an income cap that must be met to qualify. This is called the means test. This test requires that you dont make above an amount that’s based on your family size. In the event that your income exceeds this amount you will need to consider filing a chapter 13 bankruptcy.
Other considerations look at the kind of debt that you have and the income you have in relationship to the debt. If your income is high enough while you debt is still manageable bankruptcy may not be a solution for you.
More Interesting Bankruptcy Information From Our Tulsa Bankruptcy Lawyers
Bankruptcy Lawyer in Tulsa, Okla.
Medical debt can indeed harm your credit score once it reaches collections. Fortunately bankruptcy may offer a route to alleviate this financial stress. However, the specifics of bankruptcy—such as the type, the process, and its consequences on your creditworthiness—require careful consideration and professional legal counsel to ensure that you make informed decisions that align with your financial goals. If you find yourself with further questions regarding bankruptcy don’t hesitate to reach out to Kania Law Office. Their team is ready to assist you; you can contact us at (918) 743-2233 or connect with them online.