If I'm Being Sued for Medical Bills, How Will This Affect My Credit?

Medical bills differ from other types of debt in the fact that you don't always know how much treatment costs until after your hospital or physician administers it. This could leave you facing a much higher bill than you originally anticipated. Although seeking medical care isn't always optional, you are still responsible for paying the bills associated with any doctor's visit or procedure. If you fail to do so, you could face a lawsuit and damaged credit.

Losing the Lawsuit

Being sued by your health care provider or a collection agency assigned to recover your unpaid medical bills does not automatically impact your credit. Your credit only suffers if you lose the lawsuit. Lawsuits and their resulting court judgments are a matter of public record. Derogatory public records impair your credit rating as soon as they appear on your credit report. Because your credit score is a compilation of all of your credit entries and each individual's debts and assets vary, the degree of damage your credit sustains after the lawsuit may vary.

Winning the Lawsuit

When a creditor sues you, it must prove your liability for the account during the hearing. If the creditor cannot prove its case or you have a successful defense, the judge will decide the case in your favor and no judgment will subsequently appear on your credit report. Unfortunately, the absence of a judgment doesn't stop the original medical debt from damaging your credit. Health care providers often sell delinquent accounts rather than putting forth the effort necessary to collect them. If the collection agency that purchases your debt reports it to the credit bureaus, it appears on your report for seven years and lowers your credit score regardless of whether the collection agency or health care provider ever sues you.

Preventing a Lawsuit

Preventing a lawsuit is preferable than trying to defend against one. Most health care providers prefer to set up payment plans for consumers that cannot afford to pay off their medical bills in one lump sum rather than send those bills to a collection agency. If a collection agency already owns your medical debt, you can attempt to negotiate a lower balance or reasonable payment plan with the collection agency as well to avoid going to court.

Warning

Once a judgment appears on your credit report, it remains there for the duration of its reporting period. While federal law establishes the reporting period for most credit entries, The Fair Credit Reporting Act states that the reporting period for civil judgments depends upon how long the creditor has to enforce the judgment. The minimum amount of time a judgment for any debt, including medical bills, can remain on your credit record is seven years.