It is no secret that many Americans are struggling financially these days. However, people who are battling debt don’t exactly feel comfortable discussing their financial woes. Too often, there is a stigma that people who are filing for bankruptcy protection or facing the foreclosure of a home are irresponsible with money. In reality, many people in New Jersey, and nationwide, are buried under debt that has accumulated from medical bills and other unavoidable expenses.
As far back as 2009, Congress has been aware of the damage that medical debts can do to a person’s credit report. Medical debt is very different from a traditional type of debt. There are no monthly statements or due dates that remind people that there is a balance on a medical bill. Additionally, disputes with insurance companies or health care providers can delay or jeopardize payments through no fault of an individual.
There are about 40 percent of Americans who have a small amount of debt from medical bills that is seriously devastating their finances. Some are not even aware that they have a bill that needs to be paid until it has been handed over to a debt collector. When this happens, a person can face increased interest rates and penalties before they can even react.
As it stands now, medical debt can stay on a person’s credit report for up to seven years, even if it has already been paid off. The fact that so many families struggle with medical bill debt for a short period of time means that they are also facing financial backlash for seven years. With the reintroduction of a bill in Congress, however, it is possible that this will change.
The bill that was recently reintroduced would take these situations into consideration. Many people understand that unexpected medical expenses aren’t paid off overnight. When people are able to pay the bills or an insurance company finally comes through with a payment, the debt should be erased from a person’s credit report. Currently, too many people are suffering adverse consequences of unpaid medical bills through no fault of their own.
Source: The Columbus Dispatch, “Incurable financial wounds plague many,” Mike Wagner and Jill Reipenhoff, Oct. 9, 2012
- Our firm works with individuals who are struggling with all types of debt, including those brought on by medical bills. For more information on possible solutions, please visit our New Jersey personal bankruptcy page.
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