Medical bills have a way of piling up, easily overwhelming a family who was otherwise in a very comfortable financial state. Unfortunately, medical bills are typically costly and unexpected, yet cannot be avoided once medical care is necessary. On the upside for those facing mounting medical bills, typically the debt is not submitted to credit reporting agencies for several months.
Generally, if you fail to pay a bill, whether it is a missed credit card or mortgage payment, the debt will be reported to credit reporting agencies. Thereafter, the unpaid bill will affect your credit score.
When it comes to medical debt the doctor's office or hospital will often first send a series of "past due" bills, in an effort to collect the payment. If, after several months, no payment is received, they will then submit the unpaid bill to a collection service. At this point, the collection service will likely submit the unpaid medical bill to the reporting agencies, where it will subsequently affect your credit rating for seven years.
Once the debt is submitted to the reporting agencies, it affects your credit score in the same way as any other type of debt. In addition, the medical debt will not be removed from your credit score once it has been paid in full. Rather, it continues to affect your score for the same length of time as other types of consumer debt.
This can be particularly troubling for people whose credit scores have been affected by erroneously reported medical collections. Consequently, it is important to check your credit score regularly, to ensure debts have been reported accurately.
When medical debt becomes impossible to pay off, filing for Chapter 7 bankruptcy can provide some relief. Medical debt is dischargeable through bankruptcy, meaning you will no longer be responsible for paying the debt after filing. An experienced bankruptcy attorney can evaluate whether bankruptcy is an appropriate option for someone who is facing financial difficulties due to medical debts.
Source: Business Insider, "The Truth About How Medical Debt Really Impacts Your Credit Score," John Ulzheimer, June 25, 2012.