Can Hiring a Negotiator Remove Medical Debt from Your Credit Report?
Medical debt can significantly impact your credit score, making it challenging to secure loans or mortgages. Recently, the Consumer Financial Protection Bureau (CFPB) finalized a rule to remove medical debt from credit reports, which is expected to benefit millions of Americans. However, if you are dealing with existing medical debt on your credit report before this rule takes effect or need assistance in managing these debts, hiring a negotiator might be an option.
Understanding Medical Debt and Credit Reports
- New CFPB Rule: This rule will eliminate an estimated $49 billion in unpaid medical bills from the credit reports of about 15 million Americans. It also prohibits lenders from using medical information against borrowers.
- Voluntary Actions by Credit Bureaus: Major credit bureaus have already taken steps to exclude certain types of medical debts (those under $500) from reports voluntarily.
How Negotiators Can Help
Negotiators, often referred to as medical bill advocates, specialize in reviewing and negotiating medical bills. They can help identify errors or overcharges on your bills and negotiate with healthcare providers or collection agencies on your behalf.
Benefits of Hiring a Negotiator:
- Expertise: Advocates understand the complexities of medical billing and can spot potential errors.
- Negotiation Skills: They are skilled at negotiating settlements that reduce the amount owed.
- Time-Saving: Handling negotiations yourself can be time-consuming; advocates take care of this process for you.
Read: Do hospitals negotiate bills if I hire a professional?
Removing Medical Debt from Credit Reports:
While negotiators can help reduce or settle your debt, removing it entirely from your credit report typically requires paying off the settled amount if agreed upon with the collection agency through a "pay-for-delete" arrangement. However, under new regulations and voluntary actions by credit bureaus:
- Paid-off debts should no longer appear on reports.
- Debts under $500 won't be included initially.
- The new CFPB rule will prevent future inclusion of any medical debt in lending decisions.
Steps You Can Take Independently
If hiring a negotiator isn't feasible for you:
- Check Your Insurance Coverage: Ensure all covered services are properly billed through insurance.
- Dispute Inaccurate Bills: If there's an error in billing that led to incorrect reporting on your credit report, dispute it directly with healthcare providers or insurers.
- Negotiate Directly: Contact collection agencies yourself; they may offer payment plans or settlements if they believe it's more likely they'll recover some funds than none at all.
While hiring a negotiator cannot directly remove existing entries related to unpaid medical debt without settlement agreements like pay-for-delete arrangements being honored by creditors/collection agencies post-payment, their expertise can help manage these debts effectively until broader regulatory changes take hold.
Additional Resources:
For those seeking further assistance:
- Obtain free copies of your credit report annually via annualcreditreport.com.
- Consider consulting financial advisors for personalized strategies tailored to managing specific situations involving outstanding debts.
Read: Are there legal protections for patients hiring a medical bill negotiator?
