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Medical collection debt can be removed from credit reports

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Medical collection debts that are ‘paid by insurance’ can be removed from credit reports.

Question: Lisa, Commonwealth did the same thing with me (referring to re-aging accounts). The original creditor and the first collection agency had the same DOFD, then that collection agency dropped that from my credit report. My credit score went up considerably.

Two months later, Commonwealth put the same debt back on my credit report, my credit score went down way beyond what it was with the original collections agency reporting it only two months before. The date it says it’s scheduled to come off has clearly changed or else it wouldn’t be showing up now. I don’t care if different collections agencies buy and sale those accounts.

I DO CARE when the credit reporting agency dings my score horribly and I end up with a LOWER credit score than I had only two months earlier. For example, a score of 640 w/CollectionAgency1 in January, a score of 700 in February when CollectionAgency1’s debt drops off, then a score of 600 in March when that same original debt gets added back by new CollectionAgency2. And this has happened three times since Commonwealth has bought up 3 of my old debts/collections.

ALL 10 of these are debts the Veterans Administration never paid (I assume), as it takes years for them to pay any hospital bill (at least in my experience). ALL my healthcare and emergency room bills are normally paid by them, so all these unpaid medical bills tanking my credit score is doubly infuriating.

This repeated systematic re-aging of these accounts by Commonwealth, who seems to be buying up all those old medical debts, only makes matters worse. So frustrating.

Response: Frustrating indeed. According to the Federal Reserve, more than half of all debt collections on credit reports are associated with medical bills. If you are absolutely sure the Veterans Administration is going to pay the debts in full, I would follow-up with them immediately. See if you can get an answer as to when these outstanding debts will be paid.

Beginning in 2017, previously reported medical debts must be deleted from credit reports if they are being paid or have been paid in full by insurance (in your case the Veterans Administration).

This new policy stems from a 2015 settlement between the three major credit bureaus – Experian, Transunion and Equifax – and 31 state attorneys general. The three major credit reporting agencies came up with an initiative called the National Consumer Assistance Plan (NCAP).

The new policy was put in place to offer more transparency to consumers and improve credit reporting accuracy.

Medical debt is one part of the NCAP initiative. Key points regarding medical debt are the following:

  • Prohibit medical debts from being reported on credit reports until after a 180-day waiting period to allow insurance payments to be applied.
  • Remove from credit reports any previously reported medical collections that have been paid or are being paid by insurance.

Your situation in waiting for the Veterans Administration to pay the medical bills is EXACTLY why this policy was put in place. Insurance claims can take months to process and you are being penalized during the process.

Once those medical debts are paid, follow-up with the collection agencies and monitor your credit reports to insure the accounts are removed. Immediately upon removal you should see an instant increase in your FICO credit scores.

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