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Relief coming to those burdened with medical debt

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Posted at 6:11 PM, Mar 21, 2022
and last updated 2022-03-21 18:11:11-04

TAMPA, Fla. — Credit bureaus announced on Friday that they will remove nearly 70% of medical debt listed on consumer credit reports, which will make it easier for those coping with medical debt.

Deanna Cottrell is just one of the many who is thankful for Friday's announcement.

A domestic violence attack left Cottrell with a shattered leg, which led to her being in the hospital for two weeks. During her time at the hospital, she underwent 7 surgeries and ended up leaving with more than $300,000 in medical bills.

“The more and more that came. At that point, my shoulders dropped every time I got another one. An ambulance ride was almost $7,000. I was in the ambulance for maybe 15 minutes,” said Cottrell.

As Cottrell tried to rebuild her life, the medical debt made it almost impossible.

“It destroyed my credit. It made everything really bad. I couldn’t open up a bank account,” she said.

Cottrell, along with those with medical debt, will now be finding some relief after Equifax, Experian and TransUnion announced they are all removing most medical debts from the credit reports they provide.

According to research, Americans have $88 billion in medical debt on credit records.

Ted Rossman, an analyst with Bankrate.com, said medical debt should not be looked at the same as things like a mortgage, car loan or credit card debts.

“It’s often a one-time possibly either life or debt crisis kind of thing. It’s different. It’s also very convoluted with respect to insurance,” said Rossman.

The changes from the bureaus do not mean you don’t have to pay those medical bills. Moving forward, your medical bills have to go to collections for more than a year and be more than $500 before affecting your credit report.

Rossman said there’s more incentive than ever to pay off the debt.

“At this point, if you pay it off, you are done with the debt, and you are done with the ding on your credit score and that’s huge because historically that would stay on there for another seven years,” said Rossman.

Bankrate.com said when working to pay off medical debt, you should start by negotiating a payment plan with the doctor or hospital. After that, you should look for a personal loan with a low-interest rate. And most importantly, you should only use a credit card as a last resort.

“When you put it on a credit card, you are subject to a much higher interest rate, you lose these medical debt provisions we are talking about because now it’s credit card debt. It’s not medical debt anymore,” said Rossman.

Cottrell said she found debit relief through to a nonprofit charity called RIP Medical Debt, which uses donations to wipe out medical debts.

The nonprofit said more people in the U.S. are in medical debt than the entire population of Canada.

“It is important that people who have medical debt try not to feel ashamed of it because it is not their fault. The system is very much broken and the people are set up for failure,” said RIP Medical CEO Allison Sesso.

Meanwhile, Cottrell is continuing to heal physically and mentally. And without the mountain of medical debt, she’s healing financially too.

“I felt like I won the lottery. It was a huge weight lifted off my shoulders. It felt great. It felt amazing,” she said.