In the past, one accident or injury could cause years of financial pain for a family – which is why the medical debt forgiveness act was introduced in 2019. This bill addresses the problems faced by many Americans after a major health scare. When a person requires extensive medical services for an accident or injury, these problems don’t go away after the body heals. A sudden emergency can have a devastating financial effect, resulting in years of collections and credit issues.
How Medical Debt Affects Your Credit Score
The problem is that financial ruin from medical debt can have a domino effect on a person’s credit score. The common issues that result from medical debt include:
- Credit denial for future purchases
- Higher interest rates
- Poor repayment terms
- Low credit scores
Consumers take on credit card debt willingly. On the other hand, medical debt is often an unexpected and expensive bill. When illness or injury happens outside the person’s control, it can derail their financial goals for years. The goal of the Medical Debt Forgiveness Act is to reduce long-term damage to someone’s credit score.
Time to Pay Medical Bills
One of the benefits of the Medical Debt Forgiveness Act is that it gives patients time to pay their medical bills. A person has up to one year to pay the bills before the debt is sent to collections and reflected on their credit history. During this year-long grace period, the person can work with insurance to cover the bills and/or apply for financial assistance if needed.
Having a year to pay or settle medical debts before the reporting occurs gives the person more access to debt solutions. Additionally, the Medical Debt Forgiveness Act requires all medical bills that have been settled or paid in full are removed from credit scores and credit reports. Unlike other forms of debt, these balances don’t remain on credit history for seven years.
Immediate Solutions for Medical Debt
When you are juggling medical bills, then it is important that you act quickly to avoid the long-term consequences. Every situation is unique, which is why there isn’t a one-size-fits-all solution for repaying the debt. Instead, consumers need to explore their options, which might include debt consolidation, medical debt financing, or debt settlement. When the bills are paid quickly and directly, then medical providers are often willing to offer discounts since they don’t have to work with the insurance companies.
Rest assured knowing that your illness or injury doesn’t have to cause a life-long impact on your financial situation. If you have a lot of medical bills, then it is important to learn more about the Medical Debt Forgiveness Act so you know your rights as a consumer.