If the Medical Debt Relief Act were to pass, it would require 180 days to pass before medical debt could be reported on a credit report. It would also remove medical debts that had been settled or otherwise paid off. This could work to improve the credit scores of many people who live in Texas and throughout the country. The legislation was recently introduced again by Senator Jeff Merkley of Oregon.
In the meantime, the major credit bureaus are mostly abiding by the terms of the National Consumer Assistance Plan. It says that accounts that were paid by an insurance provider should be deleted by debt buyers. Furthermore, debt buyers and collectors are not supposed to report any debt that is not at least 180 days past the original delinquency. The main reason why there is a push to change the rules for how medical debt is treated is because it isn't a good predictor of a person's ability to manage other debts.
If a person is having a difficult time paying medical or other types of debt, it may be beneficial to file for bankruptcy. Doing so could make it possible to discharge or reorganize debts. If debts are reorganized, they are paid over the course of three or five years according to a plan proposed by the debtor.
In the event that there is a balance left over after the repayment period ends, it may be discharged. In the meantime, a debtor may be entitled to retain property such as a home. Once a bankruptcy case is opened, creditors generally cannot make contact with debtors either by phone or by mail. This may provide debtors with leverage to renegotiate the terms of a loan or sell property before it can be repossessed.