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Bankruptcy May Be Your Option

Report: Medical debt can damage credit scores unfairly

When you or someone you know becomes seriously ill, you want to be able to receive medical care from your physician or at your local hospital in Oklahoma without having to worry about things such as medical debt, financial challenges, and credit scores. However, a recent study conducted by the Consumer Financial Protection Bureau suggests that accruing unpaid medical debt could be unfairly detrimental to a patient’s credit score.

One previous study revealed that millions of Americans are often surprised to learn about outstanding medical bills that they did not even know were negatively affecting their credit scores. In many of these cases, consumers stated that they thought the debts were still in dispute, or that their health insurance would cover the medical costs that later appear as negative counts against their credit scores. 

In its more recent study, the CFPB sought to determine whether a person who has unpaid medical debt would also exhibit an inability to pay other types of bills. Looking at 5 million credit records over three years, it found that when comparing those with medical debt to those with identical credit scores and no medical debt, those people with the medical debt were equally, if not more likely, to resolve their other debts.

In fact, the CFPB found that consumers with outstanding medical debt can often have their scores negatively impacted by 22 points more than necessary over the seven-year period that those debts would stay on their record. 

Medical costs are often unexpected expenses; medical debt is typically thought of as one of the most common types of debt to lead to personal bankruptcy. While some lawmakers are advocating changes to the way that medical debts are recorded with credit reporting agencies, the pace of federal legislation remains slow.

If you are struggling with financial debts such as medical bills and are considering filing for bankruptcy, then consultation with attorney might help you to fully understand your situation and your legal options. 

Source: CBS News, "Getting sick can kill your credit score," Kathy Kristof, May 21, 2014

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