Medical bills are one of the second-highest types of debt reported besides student loans. According to research, Americans owe more than $1 trillion in unpaid medical debts, which accounts for 62.1 percent of bankruptcy filings.
However, recently a new rule was instituted with the help of the Consumer Financial Protection Bureau. This will give consumers time to sort out their finances and try to take care of the debts with the medical provider instead of having unnecessary credit blemishes or serious score decreases that can be harmful.
Beginning this summer, any medical debts that went to collections but have a resolved or paid off balance will fall off of your report. In addition, to wiping the slate clean, any debts that you can't afford to pay won't be reported by the credit bureaus for at least one full year, which is double the previous time frame. As for smaller debts, such as those above $500, you won't have to worry about seeing them at all throughout the first six months of next year.
This is in response to research that shows, the average consumer has lost up to 100 points due to a small medical collection that suddenly got reported, since a drop can derail a home loan, credit card approval, or vehicle loan, that was months in the making.
For consumers interested in assessing their reports for the updated reporting, you can access a free credit report online, and check to see where your medical accounts stand as of July 1st,2022.