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Can I get paid-off medical debt removed from my credit?
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Can I get paid-off medical debt removed from my credit?

On Behalf of | Jun 15, 2022 | Uncategorized

Earlier this year, the three largest credit bureaus announced that they would change how they handle medical debt, beginning July 1 and next year. For the 52% of millennials and those in every generation touched by this $88 billion burden, this comes as welcome news.

Delayed reporting

Starting in 2017, medical providers were required to wait six months before reporting delinquent medical debt. Starting at some point in 2023, medical providers will have to wait 12 months. This gives those of us with medical debt a larger bargaining trip to negotiate medical debt down or to settle before it is reported.

Minimums changing

Prior to this new guidance, any medical debt, regardless of the amount owed could be reported to the credit bureaus. However, in 2023, any debt under $500 can no longer be reported to those bureaus.

Eliminating paid-off accounts

The biggest change though begins July 1. At that time, all paid-off medical debts will be erased from Equifax, Experian and TransUnion. This means, regardless of age, those debts will fall off your credit report. Even those accounts in collection status will be erased. This could mean a significant bump in credit score for thousands of Americans.

The changes do not help everyone

For those that are not able to negotiate an affordable settlement or payment plan with medical providers and those that have not paid off their medical debt, these new changes will not help. Medical providers can still sue you. Your unpaid medical debt will still lower your credit score and hurt your chances at getting approved for any loan (or increase your payments with higher interest rates). This is why many St. Petersburg, Florida, residents still need bankruptcy, which stops all collection efforts, including ongoing court cases.