Many people believe that medical debt has no effect on their credit score. Although appearing not very different from other types of unsecured debt, medical debts seldom have a good effect, but can have a negative effect on your score. Like other unsecured debt, you can include these bills in a Chapter 7 or Chapter 13 bankruptcy filing in Miami and have them discharged.
Medical debt typically does not enhance your credit score because most physician or test facility bills are not reported to the credit bureaus. Even when you pay these debts on time, you seldom get any credit score gold stars.
However, when you cannot pay your medical bills, after a short period when your doctor or lab will try to motivate you to pay outstanding balances, the medical people send their delinquents to a collection agency or attorney.
Be aware that most collection professionals do report their accounts to credit bureaus. Therefore, this derogatory information will drag down your credit score and remain on your report for seven years from the original delinquent/default date. Should you declare bankruptcy during that period, the medical debt will stay on your report with a note indicating it was discharged.
This medical debt information is just as damaging as all other collection account data. Even when you finally pay these bills, they remain on your report, showing that they were previously delinquent. The only benefit you might enjoy? If your original balance was less than $100 (how many times do you think that happens?), the latest FICO score algorithms ignore the account.
In other cases, the derogatory information continues to appear on your credit report and can severely damage your FICO score. Do you believe that medical debt should be treated differently from other consumer credit balances? Should people get credit for paying medical bills on time, as agreed?
Source: Business Insider, “The Truth About How Medical Debt Really Impacts Your Credit Score,” John Ulzheimer, June 25, 2012