A study conducted by Consumer Reports magazine found that 30 percent of Americans have at least $500 in outstanding medical bills. People in Texas who are struggling to pay medical debts might see their credit scores negatively impacted. Medical debt is handled differently than other outstanding debts when it comes to a person's credit score. It is generally reported to credit agencies later than other debts because the healthcare provider does not do the reporting directly.
If the debt is unpaid long enough, the healthcare provider may send it to a collections agency to get it paid. The collections agency, after some efforts, will report the debt to a credit agency. Additionally, the major reporting agencies will not report medical debt to the credit bureaus until 180 days after it occurred. FICO 8, which is the most commonly used model for credit rating, does not consider medical debt balances of less than $100.
There are some steps people can take to prevent medical bills from affecting their credit scores. It is important not to assume that the insurance provider will cover everything. The Explanation of Benefits provided by the insurance company will outline the limitations of a policy. Statements should be reviewed monthly and people should reach out to their insurers if they have concerns or questions.
It's a good idea to ask the healthcare provider to provide an itemized bill. In situations where a person knows he or she cannot pay the bill, the doctor or hospital may be willing to work out a payment plan. An attorney might be able to help people reduce or eliminate their debts. In a Chapter 13 bankruptcy, the debtor submits a three or five-year repayment plan. An attorney might be able to help by negotiating with creditors or by drafting a bankruptcy petition for the client.