How Long Does Medical Debt Last? What to Know

Medical debt represents a significant financial challenge for many individuals across the United States. This form of debt arises when healthcare costs, such as deductibles, co-payments, or services not covered by insurance, remain unpaid. Millions of Americans carry medical debt, with collective totals exceeding $220 billion. Understanding the duration of medical debt, from its appearance on credit reports to the period collectors can pursue it, is important for those navigating these financial obligations.

How Medical Debt Appears on Credit Reports

Medical debt does not appear on credit reports immediately after a bill is incurred. Healthcare providers attempt to collect payments directly from patients and their insurance companies first. If a medical bill remains unpaid for an extended period, it may be sold to a third-party collection agency.

Once a medical bill is sent to collections, the collection agency must wait a full year (365 days) before reporting it to the credit bureaus. This grace period allows consumers time to resolve the debt or dispute errors before it negatively impacts their credit score.

Not all medical debt appears on a credit report. Only medical debts that have gone to collections are reported to Equifax, Experian, and TransUnion. As of April 2023, medical collection debt under $500 is no longer included on credit reports.

Medical debt is reported to credit bureaus after initial collection efforts by the healthcare provider fail. A collection agency’s involvement and the expiration of the one-year grace period precede the debt appearing on a consumer’s credit history. Addressing medical bills promptly is important to avoid collection status and potential credit impact.

How Long Medical Debt Stays on Credit Reports

Medical debt can remain on a credit report for a considerable duration, impacting creditworthiness. Negative entries related to medical collections can stay on a credit report for up to seven years from the original delinquency date. This timeframe applies to larger unpaid medical collection balances.

Recent changes affect how medical debt appears on credit reports. As of July 1, 2022, paid medical collection debt is no longer included on consumer credit reports. Once a medical collection account is paid in full, it should be removed from the credit file, ceasing its impact on credit scores.

As of April 2023, medical collection debt under $500 is no longer included on credit reports. These reforms reduce the negative impact of smaller medical bills and recognize the unique nature of medical debt.

Even with these changes, larger unpaid medical collection debts can still remain on credit reports for the full seven-year period. The duration is tied to the date the account first became delinquent with the original creditor, not the date it was sent to collections or reported. Understanding these timelines is important for credit health.

How Long Collectors Can Pursue Medical Debt

Statutes of limitations govern the period debt collectors can legally pursue medical debt. These state-level statutes vary significantly, typically ranging from three to ten years depending on jurisdiction and debt type. Some states may have a four-year limit, while others extend to ten years for written contracts.

Statutes of limitations define the maximum timeframe a creditor or collection agency has to initiate legal action to compel payment. Once this period expires, the debt is considered “time-barred,” meaning a collector can no longer legally sue the debtor in court to recover the amount owed. The debt itself does not disappear; collectors may still contact the debtor, but their legal recourse is significantly limited.

Debtor actions can inadvertently “restart the clock” on the statute of limitations. Making a partial payment or formally acknowledging the debt in writing can reset the statutory period from that action’s date. This means the collection agency could have a renewed window to pursue legal action, extending the debt’s enforceability. Consumers should exercise caution when engaging with collectors regarding older debts to avoid resetting this timeframe.

It is important to distinguish the statute of limitations for legal collection from the period medical debt remains on credit reports. Even if a debt becomes time-barred and cannot be legally pursued, it can still appear on a credit report for up to seven years from the original delinquency date. Credit reporting rules operate independently of legal enforceability, meaning a debt no longer collectible can still affect credit standing for an extended period.

Impact of Resolving Medical Debt on Its Duration

Resolving medical debt can significantly alter its duration on credit reports and the likelihood of collection efforts. When medical debt is paid in full, recent changes in credit reporting policy dictate that it should be removed from consumer credit reports. This immediate removal means the debt no longer negatively impacts credit scores, ending its reported duration.

Settling medical debt for less than the full amount can also lead to its removal from credit reports, especially if settled before it’s reported as a collection. If already reported as a collection, the account should be removed from the credit report once the agreed-upon payment is made, similar to a debt paid in full. This action quickly mitigates the debt’s credit impact.

Successfully disputing medical debt can also lead to its removal. If a dispute reveals billing errors, duplicate charges, or services not rendered, and the debt is deemed invalid, it should be erased from credit reports and collection efforts should cease. Successful dispute resolution eliminates the debt’s duration and any associated negative consequences.

These resolution methods shorten the effective life of medical debt. By addressing the debt directly through full payment, settlement, or dispute, individuals can proactively manage their financial records. These actions prevent the debt from lingering on credit reports for the full seven-year period or remaining an active target for collection agencies.