Do Hospital Bills Go Away After 7 Years?

Unpaid medical bills often lead to questions about their persistence.

Credit Report Impact and Timeframes

Unpaid medical bills can significantly influence an individual’s credit report, impacting their financial standing for a defined period. The Fair Credit Reporting Act (FCRA) generally dictates that most negative information, including collection accounts, can remain on a consumer’s credit report for up to seven years. This timeframe usually begins from the date of the original delinquency on the account.

Medical debt, if unpaid and sent to collections, typically appears on a credit report as a collection account. While the seven-year reporting period is a common reference, it is crucial to understand that the removal of this information from a credit report does not equate to the debt being forgiven or no longer owed. The debt simply becomes invisible to potential lenders or creditors reviewing the credit report.

Recent changes have altered how medical debt is reported. As of July 2022, a 365-day grace period was implemented, meaning unpaid medical bills generally do not appear on credit reports for a full year after the date of delinquency. Furthermore, paid medical collections are now removed from credit reports, and medical collections with an initial balance under $500 should no longer appear.

A significant development is the Consumer Financial Protection Bureau (CFPB) rule, effective March 17, 2024, which bans consumer reporting agencies from including medical debt information on credit reports sent to lenders. This aims to prevent medical bills from influencing lending decisions, as medical debt has been identified as a poor predictor of a borrower’s ability to repay other debts. This rule is expected to remove billions of dollars in medical bills from credit reports, potentially increasing credit scores for millions of Americans.

Even with these changes, it is important to check credit reports regularly. While medical debt may be removed or prohibited from appearing, any judgments obtained by creditors could still be reported.

Legal Action Limits and State Laws

Beyond credit reporting, medical debt is subject to legal time limits for collection through lawsuits, known as the statute of limitations (SOL). This statute sets a deadline within which a creditor or debt collector can file a lawsuit to legally compel payment of a debt. Once this period expires, the debt is considered “time-barred.”

The duration of the statute of limitations varies significantly across different states, typically ranging from three to ten years. In some instances, depending on the state and the specific type of agreement (e.g., written contract versus oral agreement), this period could extend to 10-15 years. The clock for the statute of limitations usually begins ticking from the date of service or the last activity on the account.

Once a debt becomes time-barred, a creditor generally cannot successfully sue the debtor in court to collect it. If a lawsuit is filed for a time-barred debt, the debtor can assert the expiration of the statute of limitations as a defense in court.

Making a partial payment on a time-barred debt or even verbally acknowledging the debt can, in many states, reset the statute of limitations. This action could restart the legal clock, making the debtor vulnerable to a lawsuit again. Therefore, exercising caution when interacting with debt collectors about older debts is advisable.

Ongoing Obligation and Collection Efforts

Despite medical debt potentially falling off a credit report or becoming time-barred under the statute of limitations, the underlying obligation does not simply vanish. The debt remains a valid financial responsibility until it is fully paid, settled for a lesser amount, or discharged through processes like bankruptcy.

Debt collectors can continue to pursue payment for medical bills even after they are no longer reported on credit files or are time-barred. These collection efforts may include continued phone calls, sending letters, or attempting to negotiate a settlement for a reduced amount. While a lawsuit may be limited, the debt itself persists, and collection agencies can still contact the debtor to seek payment.

Hospitals and other healthcare providers can still take actions such as denying non-emergency services for unpaid bills. If a creditor obtains a judgment against a debtor in court before the statute of limitations expires, that judgment can remain on the credit report for an extended period, often seven years from the judgment date, and can lead to other collection methods like wage garnishment or liens. Managing medical debt requires understanding these ongoing obligations and the various methods creditors may use to recover what is owed.