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How medical debt may lead to bankruptcy

Individuals in Ohio who have faced medical issues may also be struggling to pay their bills. Medical bills are among the most common ones received by collection agencies, and medical debt is a leading cause of bankruptcy.

Some consumer advocates argue that medical debt should not be included in credit scores, and in fact, in 2014 FICO introduced a new scoring model that will lessen the impact of this type of obligation in some respects. One problem is that some medical debts are incorrectly assigned. According to the founder of one collections agency, around 20 percent of the bills received are a result of a dispute with an insurance company that should have paid the bill or are due to an overcharge or charge for items that the patient never received. As a result, individuals should keep track of medical procedures and expenses. It may be months before medical bills first begin to arrive, and careful records will help with determining whether or not the bills are correct.

An item that goes to collections can in some cases cost an individual up to 100 points on their FICO score. The only exception is items that are under $100. These do not appear on credit reports. There may also be delays in paying bills when insurance companies are involved. Those in such a situation should try to keep the lines of communication open with providers and insurers.

People who are having trouble paying their medical expenses may in some cases consider bankruptcy as an alternative. An attorney who has experience with these matters can discuss the eligibility requirements associated with Chapter 7 as part of an exploration of available debt relief option.

Source:, "How will unpaid medical bills hurt credit?", Janna Herron, Oct. 15, 2013

Source: U.S. News & World Report, "3 Myths and 3 Truths About FICO 9", Lacie Glover, Sept. 25, 2014

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