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Medical Debt Relief Act and Bankruptcy

Medical Debt Relief Act and Bankruptcy
"""Medical debts are the primary reason why so many Americans declare bankruptcy. Unpaid medical bills can wreak havoc on credit ratings and wreak havoc on household and financial harmony. Filing for bankruptcy does offer protection against creditors seeking wage garnishment or other forms of forced repayment, but it is not the only option. The Medical Debt Relief Act, which was enacted in 2010, provides numerous individuals with the opportunity to escape from substantial debt.

Seven Years Remain for Medical Debt.

According to sources, medical debt remains on your credit report for seven years; even if you have repaid the debt, it remains on your history, which can harm your reputation and make you less desirable as an applicant for mortgages or other credit. In many instances, it can be virtually impossible to obtain a favorable mortgage loan agreement if you have medical debt on your credit report. The Medical Debt Relief Act permits this history to be erased significantly faster than under the previous system. Under the act, as soon as the debt is repaid or otherwise resolved, it is immediately removed from your credit report.

It is the first time that resolved or paid-off debt is completely removed from a borrower's credit report, which is the primary reason for the act's revolutionary nature. If a debt goes to a collection agency or any form of collection proceedings, the damage to your credit report is typically already done. Even after the debt has been repaid, the blemish persists as a scar, which causes future lenders to feel uneasy. Under this system, however, once a debt is paid in full, it is as if it never existed. It is a potent change in favor of the borrower and those who have experienced the vicissitudes of life in one way or another; a person no longer faces long-term penalties for their misfortune in becoming ill and incurring debt.

After all, medical debt has no meaningful relationship with a borrower's credit score. A borrower who defaults on a loan he has applied for has nonetheless made the decision to obtain such a loan, regardless of the circumstances. Those with high medical expenses did not choose to obtain medical care; they were compelled to do so due to illness or injury. The fact that the act recognizes this fact and places such debt in its own category augur well for the future improvement of debt and bankruptcy tools.""

" - https://www.affordablecebu.com/

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"Medical Debt Relief Act and Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 78 times and generated 0 comments. The article was created on and updated on 31 May 2023.
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