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Changes in medical billing may not prevent bankruptcy for some

Any New Jersey resident who has been to a doctor understands how confusing, complicated and frustrating the medical billing process can be. Even though changes are on the horizon regarding how medical bills are reported to the credit bureaus, it may not be enough for some people. Filing for bankruptcy could help many patients clear the slate and give them a fresh financial start.

What seemed like a simple rash turned into a credit nightmare for one out-of-state woman. Her medical problem was resolved, but her medical billing problem was only beginning. Even though she started a payment plan, her account was turned over to collections, and her credit score took a significant hit that even forced her to quit school because she was unable to keep her student loans. A woman in another state also had her account sent to collections even though she was on a payment plan.

Under the current reporting structure, an account can be turned over to collections after only 30 days of non-payment. A national settlement with TransUnion, Equifax and Experian includes new reporting rules for medical debt. Medical providers and their collection agencies will not be able to report unpaid medical debt for at least 180 days (six months), and any report must be removed from an individual's credit report once the debt is paid. Unfortunately, these changes are coming too late for many Americans.

The new rules may only delay the inevitable for many people who are struggling with medical debt. Even a seemingly small amount of medical debt can quickly become unmanageable for many New Jersey residents since it can be difficult to plan for an unexpected illness or injury. Filing for bankruptcy could provide the financial relief that many people need in order to recover financially from an ailment or illness from which they had already recovered physically.

Source:, "Medical payment plan doesn't always keep debt out of collections or off your credit report", Jenn Strathman, July 9, 2015

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