If you have significant medical debt, you are likely familiar with its negative impact on your credit score. Fortunately, recent changes in Tennessee law regarding medical debt have decreased the impact it has on credit reports.
How medical debt affects credit reports
Medical debt is a significant concern for many individuals and families. When medical bills go unpaid, they can be sent to collection agencies, which can negatively impact your credit score. In addition, medical debt can remain on your report for up to seven years, making it challenging to obtain credit cards, loans and even housing.
The Tennessee Medical Debt Relief Act
The Tennessee Medical Debt Relief Act, signed into law in 2020, aims to provide relief for individuals struggling with medical debt. The law requires that medical debts be removed from credit reports once an insurance company pays them. It also involves the removal of medical debts from credit reports within 60 days of payment so that they do not continue to impact your credit score negatively.
The impact of consumer bankruptcy
If you are struggling with medical debt, you might be thinking about filing for consumer bankruptcy. While filing for bankruptcy can be an effective way to discharge medical debt, it can also significantly impact your credit score. In addition, consumer bankruptcy can remain on your report for 10 years, making it difficult to obtain credit in the future.
Other options for dealing with medical debt
If you have medical debt, know that there are several other options to consider before filing for bankruptcy. For example, you may be able to find a way to negotiate a payment plan with your healthcare provider or negotiate with collection agencies to settle your debt for less than you owe. Additionally, there are financial assistance programs that can help cover the cost of your medical bills.
New developments in the credit industry
As the credit industry continues to evolve, new developments are emerging that may make it easier to deal with medical debt. For example, the Consumer Financial Protection Bureau has recently issued new guidelines that require credit reporting agencies to remove certain negative information from credit reports, including medical debt. These new guidelines may provide additional relief for individuals struggling with medical debt in the future.