Does Medical Debt Go Away After Seven Years?
If you’ve ever been in a situation where you didn’t have health insurance or were under-insured, you may be faced with some medical debt. Two-thirds of Americans state that they are “very worried” (38 percent) or “somewhat worried” (29 percent) about being able to afford unexpected medical bills for themselves or their family. A surprise medical bill can be an extremely stressful occurrence, especially if you’re already facing debt.
Does Medical Debt Go Away with Time?
You may have heard that medical debt disappears after seven years. Like all myths, the “seven-year-rule” does have a grain of truth to it—but medical bill debt forgiveness is not as easy as it sounds. In most situations, it’s better to pay off the debt before it hits the seven-year mark in order to avoid harassment and the potential for a lawsuit.
Medical Debt Statute of Limitations
Since medical debt is considered as a written contract, its statute of limitations varies by state. This is what the medical debt statute of limitations is in each state:
|State||Statute of Limitations|
|New Hampshire||3 Years|
|New Jersey||6 Years|
|New Mexico||6 Years|
|New York||6 Years|
|North Carolina||3 Years|
|North Dakota||6 Years|
|Rhode Island||10 Years|
|South Carolina||3 Years|
|South Dakota||6 Years|
|West Virginia||10 Years|
New Era Debt Relief explains what can happen when medical debt is ignored:
You May Face Long-term Consequences
If you took out a loan or charged a medical bill, the payment is usually due in 30 days. If the amount is too large and you are unable to repay the full amount in time, late fees will apply. Not only will you acquire interest, but the late payments will also affect your overall credit score.
If the debt has been ignored for 90 days, you are likely facing intense collection efforts and more late fees. Calls and letters from the creditor will increase and become more aggressive. If the debt was placed on a credit card, the issuer may shut down the card and report the delinquency to credit reporting bureaus.
When an original creditor decides a debt is not collectible, they may opt to sell it to a third-party debt collector. They will also inform the credit bureaus that your account was “charged off”. This will result in a negative mark that will stay on your credit reports for seven years, making credit repair an obstacle.
When a debt collector has been ignored and has not received the money they are owed, they may decide to sue you. You will receive a summons about the lawsuit and the court hearing. It is extremely important to respond to the lawsuit and show up for the hearing.
Even if you ignore the lawsuit you will still have to pay the judgement amount. This could lead to automatic paycheck reductions or even your accounts being frozen.
The Debt May Still Affect You
A statute of limitations (SOL) is the amount of time a party has to take legal action. When it comes to medical debt the collector only has a certain amount of time to file a suit in order to collect the remaining balance. The length of time depends on which state you live in and how you communicate with the debt collector.
The SOL has nothing to do with how long medical debt collections stay on your credit report. It usually takes seven years for most debts to fall off of your credit report. But that does not mean the debt has gone away, it just isn’t being reported by the credit bureau anymore. This means that your credit report will no longer be affected by that debt, even though you still owe money. Any lawsuit resulting in a civil judgement will drive your score lower, and filing for bankruptcy may have even more of a negative effect.
When the SOL on your debt expires, that also does not mean your debt is gone. What it does mean is that you are no longer legally responsible for the debt. There is a difference between the two—because you can still be sued for the debt.
If the SOL on that debt has expired, it is your responsibility to alert the court. The creditor won’t get a judgement against you as long as you come to court prepared to prove that the debt is too old. Proof may include a personal check that shows the last time you made a payment or records of communication that you have made concerning that debt. The start date for medical debt collections SOL is the date of your last payment.
Remember that making a partial payment, a payment arrangement, or accepting a settlement off on an old debt can start the SOL clock over again. If the SOL restarts, you are giving the creditor or debt collector more time to take legal actions against you for the debt. Although making a payment resets the SOL timeline, it does not restart your credit reporting time limit which will remain seven years for most debts.
You May Be Able to Repay the Debt
Statutes of limitations are a form of protection for patrons, but they are not automatic. It is your responsibility to acquire knowledge and stay informed about your debts.
The best way to make sure that medical debt doesn’t ruin your credit or place you within a legal situation is to pay it off. Credit scores do not take life struggles into consideration, so paid debts reflect much better than unpaid ones. Proof that you have paid the debt in full is the ideal protection against any future collection attempts.
If the medical debt is too massive to repay at the time, be sure to look into alternative options. You can ask the collector about repayment plans and hardship programs that they offer. Medical service providers tend to be more workable than the traditional debt collectors.
If you have low income and high medical bills, you may be eligible for an income-driven hardship plan. An income-driven hardship plan can break up the full amount you owe by into more manageable payments. In some situations, you may even be able to reduce the total amount you owe.
If the medical debt has moved to collections, you may be able to work something out. A settlement compromise enables you to pay less than the full balance you owe. Any amount taken off of the debt is usually a lifesaver in most situations. Tax implications may apply when working out a settlement, but make sure to get everything in writing.
Medical Debt FAQs
Does Medical Debt Affect Credit Score?
Depending on the healthcare provider to which the debt is owed, a medical debt may or may not affect credit score. Since many healthcare providers do not report medical debt to Transunion, Equifax, or Experian (the three main consumer credit bureaus), a medical debt will typically not appear on your credit report unless it’s sent to a collection agency.
As of July 1, 2022, medical debt reporting on credit scores has been changed in a number of ways:
- Even after a medical debt is sent to collections, there is a 365-day grace period before the debt appears in your credit history, so an unpaid medical bill may not impact your credit immediately. This was increased from the 6-month grace period enacted for medical debt in 2017.
- All medical debts that have been paid in full will no longer be included in credit reports.
- As of the first two quarters of 2023, the three major credit bureaus will no longer include medical debts under $500 that are in collections in consumer credit reports.
Am I Responsible for Repaying My Spouse’s Medical Debt After Death?
Depending on the state in which you live, it is possible that the repaying of a deceased spouse’s debts may fall onto your shoulders. In community property states such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, a surviving spouse may be able to be held responsible for repaying the debts of their deceased wife or husband.
In the majority of situations, friends or other relatives cannot be held responsible for repaying the deceased debts and it is illegal for a debt collector to try to collect the funds from another individual, but for a spouse of the deceased in a community property state, it is fair game for debt collectors to pursue repayment from the surviving spouse.
Get Experienced Help with Medical Debt Today
If you are overwhelmed with the amount of debts you have acquired, it may be time to speak with a debt professional. New Era Debt Solutions has settled more than $250,000,000 dollars of debt since 1999 and wants you to be our next success story. If you need assistance achieving financial freedom, contact one of our friendly counselors at New Era Debt Solutions to learn more about finding the debt relief option that best fits your needs and budget. Our counselors are with you every step of the way.