Unpaid medical bills confront many people in Texas. According to the Consumer Financial Protection Bureau, 43 million credit reports contain medical collections. Although the credit bureaus Equifax, Experian and TransUnion will alter how they report medical debts as part of two settlements with state attorneys general, consumer advocates expect little relief for consumers.
The credit bureaus will now wait 180 days before recording unpaid medical bills. Additionally, outstanding bills paid belatedly by insurance companies will be removed. Data scientists at FICO calculate that roughly 200,000 people might benefit from the 180-day delay. This accounts for less than 0.1 percent of consumers tracked by the credit bureaus. As for collections now eligible for removal because of late insurance payments, no one anticipates that many people will benefit.
The great majority of medical collections represent bills that people have no means of paying. For this reason, the CFPB and some lawmakers want to lessen the impact of medical debts. Credit scoring companies have updated their standards, but their formulas that reduce the weight given to medical collections have not been widely adopted. For the most part, people with medical debts will continue to see their credit scores drop. Low credit scores impose further financial hardships on people by driving up their interest rates on loans, utility deposits and insurance premiums as well as reducing their ability to rent apartments.
A person looking for ways to manage debts could consult an attorney about filing for bankruptcy. A Chapter 13 bankruptcy might allow someone to establish a manageable payment plan and eventually rebuild a credit rating. An attorney could examine the details of the client’s financial situation and write a repayment proposal for the court. The process would also require creditors to communicate with the attorney and to halt collection efforts.