Given the detrimental effects of debt on one’s financial situation, it is understandable that some people would wish for it to disappear on its own.
For example, one common belief is that medical debt vanishes entirely after seven years. Even though medical debt may be less difficult to manage than high-interest consumer debt in some circumstances, it won’t always disappear after seven years, though it may cease to have a negative influence on your credit report.
One of our writers shared a story about medical debt that she saw on social media. We decided to let her tell it firsthand:
Unfortunately, for this friend as well as all the ardent proponents of the seven-year rule, it’s not quite that easy to eliminate medical debt.
The seven-year myth: Many people believe that medical debt magically disappears after seven years. While this isn’t entirely accurate there are some truths behind this belief.
Federal law and credit reports: The Fair Credit Reporting Act (FCRA) limits how long negative information can stay on your credit report. Most collections accounts, including medical debt, can only remain for seven years. After that, they shouldn’t impact your credit score anymore.
Exceptions to the rule: Some exceptions exist. Chapter 7 bankruptcy stays on your report for 10 years. Judgments are enforceable for seven years, or until the statute of limitations in your state runs out, whichever comes first.
Debt collection statutes of limitations: Different states have different statutes of limitations for debt collection. These laws limit the time a creditor can legally force you to pay a debt. The statute of limitations for medical debt varies by state and type of debt (oral agreement, written contract, promissory note, open-ended agreement)
Just because the statute of limitations expires doesn’t mean the debt disappears. You may still be legally responsible for it. If it’s removed from your credit report, it won’t have an impact on your applications for jobs, apartments, or loans.
New 12-month buffer for medical debt: In July 2022, credit bureaus implemented a 365-day grace period before unpaid medical collections appear on your credit report. This allows time to resolve the issue, pay the bill, or get insurance to cover it.
Dealing with medical debt:
- Talk to the hospital’s billing department: They may be willing to work out a payment plan or accept partial payment.
- Medical debt may not be reported to credit bureaus: Medical practices often don’t report to credit bureaus unless the debt goes to collections.
Bottom line: Medical debt isn’t as damaging as other debt, but it’s best to address it rather than wait for it to disappear.
Additional resources:
- Money Management International (MMI): https://www.moneymanagement.org/
- OppLoans OppU: https://www.opploans.com/oppu/
Recall that this information is not legal advice and is only meant for educational purposes. Consult a qualified attorney for specific legal questions.
The 12-month buffer for new medical debt
In July 2022, the three major credit bureaus — Equifax, Experian, and TransUnion — implemented a new rule to give patients a 365-day grace period to resolve their medical debt before it shows up on their credit reports. These credit reporting companies have also taken steps to remove all medical collections under $500, effective April 11, 2023.
If you have health insurance, you’re probably paying more than enough in premiums. Your credit score shouldn’t take a hit for medical procedures that are covered anyway.
The 7-year figure does come from somewhere
While it may not be totally true that medical debt will vanish after seven years, there are consumer protection laws that restrict how long certain negative information can remain on your credit report. This includes medical debt.
According to provisions in the Fair Credit Reporting Act, most accounts that go to collections can only remain on your credit report for a seven-year time period. After that, they shouldnt negatively affect your credit score anymore.
There are, of course, some exceptions to this rule. Chapter 7 bankruptcy filings stay on your credit report for 10 years. Judgments are enforceable for seven years or until the expiration of your state’s statute of limitations, whichever comes first. And here’s one more warning: Depending on the statute of limitations, unpaid medical bills may still legally bind you even after they have been removed from your credit report after seven years. Simply put, when those debts are removed from your record, you won’t have to worry about them when you apply for a job, an apartment, or a loan.
After 7 Years What Happens To Debt
FAQ
What happens after 7 years of not paying debt?
Do medical bills eventually disappear?
How long until medical debt is forgiven?
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State
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Statute of Limitations
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California
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4 Years
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Colorado
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6 Years
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Connecticut
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6 Years
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Delaware
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3 Years
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Do medical bills come off your credit report after 7 years?
Do medical bills end up in collections?
Most medical debt items on credit reports are under $500. But many people with medical debt owe multiple creditors. Many medical bills end up in collections because people aren’t aware they owe anything or because they expected their insurance to cover the cost. What happens when medical bills are sent to a collections agency?
How long after antibiotic treatment till symptoms go away?
Antibiotics begin their action after their administration. Usually, symptoms get relieved in 1-2 days. However, it depends on the type of disease being treated. A person will become non-infectious 24 hours after taking the tablets.
How long do unpaid medical bills stay on a credit report?
Unpaid bills, even those with a small balance, remain on a credit report for seven years or until they’re paid. Read more: 5 ways to handle a surprise medical bill Should you pay off medical debt after it’s reported to your credit?
Can medical debt be erased after 7 years?
Well, yes and no. Though medical debt isn’t magically erased after seven years, it does have less of an effect on your overall financial health. How does medical debt impact your credit report? Here’s the progress of a typical medical bill: