Short-Term Goal: Pay Your Medical Debt Down To $500 By March
No matter which strategy you use, putting as much money as you can toward debt repayment will help you make progress toward your financial goals. Some people swear by the snowball method, where you start with the smallest debt, while others prefer the avalanche method, where you start with the biggest debt; some even choose to focus their attention on the debt with the highest interest rate. Either way, if you have any money in your budget to pay more than the minimum payment on debts, you should put it toward debt repayment. No matter which of your debts you choose to allocate the excess money to, getting out of debt is a long process. Therefore, you should start with the debt that you feel the most motivated to pay off, the one you can’t wait to get rid of. This year, you have an incentive to focus on paying down your medical debt, since a new rule will go into effect in March 2023, according to which unpaid medical bills where the outstanding balance is less than $500 will not appear on your credit report. If you are struggling with so many debts that you don’t know where to begin when it comes to paying them down, contact a Boca Raton debt lawyer.
Protections for Consumers Regarding Medical Debts
We have all heard the horror stories about hospitals suing patients over unpaid bills and about relatively minor illnesses and injuries that ruined the finances of entire families. In recent years, several laws have gone into effect increasing protections for consumers in the face of unaffordable medical bills, even though most of these reforms do not make the treatments themselves cost any less:
- Beginning in March 2023, medical bills with unpaid balances of $500 or less will no longer appear on consumers’ credit reports.
- Medical debt collectors must follow stricter rules about limiting communications related to debt collections than most other creditors.
- Medical debt collectors must ensure that the patient knows about a medical bill before they report it to a credit bureau.
- Unpaid medical bills only begin to show up on your credit report a year after the date of treatment.
- Once you pay off a medical bill, it ceases to appear on your credit report.
- The No Surprises Act limits the amount that healthcare providers can charge for treatment provided on an emergency basis.
Your credit score may or may not be the main motivation for paying down your debt. If you are $20,000 in debt, and you pay it down by $1,000, you will still be $19,000 in debt. If you owe $1,400 in medical debt and you pay that $1,000 toward it this quarter, your credit score will get a bigger boost than if you pay the same amount toward your credit card debt or car loan.
Work With a Debt Lawyer to Improve Your Credit Score
A South Florida debt lawyer can help you pay down your medical debt and increase your access to credit. Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.
Sources:
moneytalksnews.com/10-amazing-ways-to-build-wealth-at-any-age/
consumerfinance.gov/about-us/newsroom/cfpb-publishes-analysis-of-potential-impacts-of-medical-debt-credit-reporting-changes/#:~:text=Starting%20in%202023%2C%20medical%20collections,than%20medical%20bills%20over%20%24500
