Some Arizona residents may have experience dealing with different forms of medical debt. According to the Consumer Financial Protection Bureau, recently published research indicates that having medical debt may inadvertently cause lenders to underestimate someone’s credit worthiness. Another study performed by the Federal Reserve Board is said to have found that more than half of all collections in credit reports are associated with medical debt.
Sources say that the problem stems from innate differences between medical debt and other forms of debt. Medical debt can often result from unexpected life occurrences that do not necessarily reflect upon the subject’s disposition and level of financial responsibility. Moreover, these forms of debt can sometimes be caused by medical providers mistakenly billing their customers and failing to inform them of an account in collections.
The study also reportedly shows that someone who repays their medical debt may nevertheless have their credit score unjustifiably underestimated by as much as 22 points. Since even a relatively minor credit increase of 10 to 20 points can save someone a great deal of money in their future credit transactions, such underestimations may be having a harmful impact on people with medical bills.
If someone develops an unexpected medical condition, they may be unable to work and forced to incur thousands of dollars in medical expenses that can come to threaten their financial stability. Someone that is encountering difficulty with their medical debt may wish to consult their situation with an attorney to explore options for securing debt relief. In some cases, filing for bankruptcy may be the most advisable course of action. If so, an attorney can help someone to prepare the necessary paperwork and facilitate the process so that they can more quickly achieve a fresh financial start.
Source: Main Street, “Why Does Being Unhealthy Ruin Your Credit Score?”, Chris Metinko, July 07, 2014