What happens if you don’t pay medical bills? Does medical debt affect your credit score? Are there lawyers who help protect consumers from surprise medical bills and unforeseen out-of-pocket expenses?
All are common questions we hear relatively often at Sadek Law. In this blog, our NJ and PA bankruptcy attorneys explain how medical bills affect your credit and what you can do to protect your financial future.
What Happens If You Don’t Pay Medical Bills in Pennsylvania or New Jersey?
If unpaid medical bills are piling up and you’re unable to pay, a few outcomes can occur. Unpaid bills can accrue late fees and interest. They can also be sent to collection agencies. When unpaid medical debt is purchased, the collections account will likely be added to your credit report. Creditors can take legal action against those who owe medical debt by garnishing wages if they don’t pay the health care debt balance.
Unpaid bills can progress to collection accounts, typically after the health insurance payment has been processed. Once insurers have been billed and the patient receives the bill, if the patient doesn’t start paying, the provider or lender can attempt to collect. Most healthcare providers will attempt to collect payment from patients for several months, typically between 90 and 180 days. Some providers and lenders will call patients before selling the unpaid medical debt information.
New Federal Laws Protecting Patients from Medical Debt Credit Damage
The No Surprises Act (effective 2022) was part of the Consolidated Appropriations Act. The Consolidated Appropriations Act. was meant to protect consumers from surprise medical bills when they receive emergency or out-of-network medical services without proper consent.
In April 2023, the three major credit reporting agencies eliminated collections for medical debts under $500 from consumer credit reports. If paid, these removed medical bills from credit reports since the change announced in 2022, according to the Consumer Financial Protection Bureau.
A final medical debt rule issued by the Consumer Financial Protection Bureau (CFPB) on January 7, 2025, would have removed medical debt from credit reports for most people. In addition, it would have prohibited debt collectors from using medical debt in credit decisions.
Federal Courts Strike Down CFPB Medical Debt Rule Under Regulation V
On July 11, 2025, a federal court in the Eastern District of Texas vacated the medical debt rule, finding the CFPB exceeded its authority under the Fair Credit Reporting Act (FCRA). Because Congress vacated the CFPB’s rule, medical debt continues. It can be used by major credit reporting agencies and considered in credit decisions under federal law unless other laws are in place at the state level.
Consumer Credit Reports And Scoring Models
Major National Credit Bureaus
- Equifax: one of the three major U.S. credit bureaus that collects data and makes consumer credit reports available to lenders and other agencies.
- Experian: another of the “Big Three” credit-reporting agencies, compiling credit histories used to evaluate creditworthiness, and operating globally in multiple markets.
- TransUnion: completes the major credit reporting agencies; it maintains credit files, provides credit monitoring services, and enables consumers to manage consumer credit reports.
Types Of Credit Scores
- FICO Score: The FICO Score is the most widely used credit-scoring model by U.S. lenders. Standard scoring models like FICO 8 and 9 adjust how medical debt affects scores. Industry scoring models such as FICO Auto Score and FICO Bankcard Score are tailored to predict risk for car loans and credit card debt, while FICO Mortgage Scores are used by Fannie Mae and Freddie Mac for home loan approvals.
- VantageScore (3.0 and 4.0 versions): VantageScore uses trended credit data and alternative payment histories to give a broader picture of consumer credit-worthiness.
- UltraFICO and FICO XD: These expand credit access by factoring in checking, savings, and utility payment data for consumers with limited or no traditional credit history.
Pennsylvania Medical Debt Laws and Credit Protection
The Pennsylvania Fair Credit Extension Uniformity Act (FCEUA) (Act 7 of 2000) governs consumer debt, including that by healthcare providers for medical debt in credit reports. State law prohibits harassment, false statements, unauthorized interest or fees, and calling at inconvenient times (before 8 a.m. or after 9 p.m.) or at workplaces that restrict such communication. Consumers may file civil actions within two years of a violation.
In Pennsylvania, nonprofit hospitals with state programs must maintain written, publicly accessible policies; provide notice of available financial assistance programs; screen patients for eligibility before using extraordinary actions; and cap charges for eligible individuals to those generally billed to insured residents.
Pennsylvania’s statute of limitations for medical debt is four years from the date of the first missed payment or most recent account activity. After that period, creditors cannot sue to collect the balance.
In Philadelphia and Pittsburgh, hospital policies vary by system. Large nonprofit health care providers such as the University of Pennsylvania Health System, Jefferson Health, and UPMC offer income-based discounts and free care for low-income patients, with eligibility typically ranging from 200 % to 400 % of the federal poverty level. Patients may also qualify for financial assistance from state programs prior to any medical-debt collection or credit reporting.
New Jersey Medical Debt Laws and Patient Rights
The New Jersey Hospital Care Payment Assistance Program (Charity Care) provides free or discounted hospital services to uninsured or underinsured residents who meet income and asset limits. Eligibility is based on household income, generally up to 300% of the poverty level, with reduced-cost health care available above that threshold. Hospitals must make applications easily accessible and cannot deny emergency care to eligible patients.
Louisa Carman Medical Debt Relief Act (Effective 2024–2025)
The Louisa Carman Medical Debt Relief Act protects people from aggressive practices. Paid medical debts and those under $500 cannot be reported. Health care providers must wait at least 120 days before selling unpaid medical bills to collection agencies, offer income-based payment plans, and cap interest at 3% per year. Wage garnishment is prohibited for individuals earning below 600% of the federal poverty level, and full enforcement took effect July 22, 2025.
Hospitals in Newark and Jersey City are required to follow state billing standards, ensuring financial-assistance information is publicly posted and available to all patients at admission or discharge. These hospitals must comply with state medical-debt restrictions, repayment options, and billing transparency requirements.
Does Medical Debt Affect Your Credit Score?
Yes. Medical debt can affect your credit score. The impact depends on the amount owed, payment status shown, and the model of credit-scoring used. Consumers with excellent credit (above 750) may see a drop of 50–100 points when new medical collections appear, while those with lower scores may see smaller declines.
Unlike credit card debt, medical debt is treated more leniently under FICO 9 and VantageScore 4.0, which ignore paid medical collections and reduce the weight of unpaid bills. Lenders reviewing home applications or other types of loans may still see unpaid medical accounts on reports. This can potentially affect approval or interest rates.
Once medical bills are paid or removed, most people can expect to see an improvement in their credit scores within 3–6 months as updated data is reflected by the major credit bureaus.
Timeframe for Medical Collections in Pennsylvania and New Jersey
In Pennsylvania and New Jersey, the timeframe before a medical bill is sent to collection agencies or appears on a credit report can vary significantly by health care provider. It typically appears between 90 and 180 days after the initial billing. In New Jersey, medical collections can’t engage until 120 days after the first bill was sent, and a reasonable payment plan has been offered.
Hospitals in both states must follow billing rules that include notifying patients of financial assistance, screening for eligibility, and postponing aggressive medical collection or credit-reporting actions. Consumers maintain the right to dispute inaccurate or illegally collected medical debt and to be free from harassment by debt collectors.
Medical Bills in Collections in Pennsylvania and New Jersey – What To Do
If your medical bills have already been sent to medical collections, you may still have options.
First, request a debt validation letter within 30 days to confirm the balance, date of medical service, and the original creditor. If the collector can’t verify the medical debt, dispute it with the credit bureaus to have it removed. Call the hospital billing department directly and ask if you still qualify for financial assistance or charity care.
Removing Medical Collections From Credit Report – HIPAA Questions
According to HIPAA Privacy Rules, healthcare providers may disclose protected health information (PHI) to collectors. The law requires only the minimum necessary information to be disclosed when engaging in debt-collection or credit-reporting activities. If credit reports include detailed medical information that falls under PHI, you may have the right to dispute it.
How to Negotiate Medical Bills in Collections
To negotiate medical bills, call the collection agency or the health care provider immediately. Request a full itemized statement to verify accuracy, then offer a lump-sum settlement or a plan you can afford. Ask for a written agreement stating that the collection account will be marked “paid in full” or deleted once paid.
How to Remove Medical Collections From Credit Report
You can remove medical collections from credit reports if medical bills are paid, under $500, or reported in error. If the collection account is eligible, file a dispute with the credit bureau and request written confirmation of deletion. Paid medical bills are automatically removed from most credit reports. However, if an old or incorrect entry remains, submit documentation of repayment or error to have it deleted under FCRA protections.
How Long Do Medical Bills Stay on Your Credit Report?
In general, medical bills remain on credit reports for seven years from the original date of delinquency under FCRA.
Paid medical debt is often removed earlier, while unpaid medical debt stays until that seven-year period expires. Federal law forbids reaging debt, or changing the delinquency date to restart the clock. The statute of limitations for legal action is 4 years in Pennsylvania and six years in New Jersey. These time limits do not shorten the seven-year credit-reporting period.
Can You File Bankruptcy on Medical Bills In Pennsylvania or New Jersey?
Chapter 7 Bankruptcy: Medical Bills
Chapter 7 bankruptcy can help eliminate overwhelming medical debt for certain clients. Eligibility depends on passing a bankruptcy means test in Pennsylvania and New Jersey, which compares your household income to the state median. If your income falls below that level, you may be eligible for Chapter 7 relief. While bankruptcy remains on your credit report for a decade, its impact on credit scores and borrowing power decreases over time, unlike medical bills that you cannot pay. A Chapter 7 bankruptcy attorney at Sadek Bankruptcy Law Offices can evaluate your eligibility and guide you through the process.
Chapter 13 Bankruptcy: Medical Care Debt
Chapter 13 bankruptcy allows you to reorganize and repay medical debt through structured repayment rather than full liquidation. If your income exceeds the state median, this option lets you consolidate debts into manageable monthly payments while protecting your assets. You can also include other debts that are unsecured, and in some cases, a portion of the balance may be discharged once the plan is completed. Contact a Chapter 13 bankruptcy attorney on our team to learn more.
Can Medical Bills Be Included in Bankruptcy?
Yes, medical bills can be included in bankruptcy because they are considered unsecured debt, just like debt from credit cards and personal loans. In Chapter 7 bankruptcy, eligible medical debt can be completely discharged, eliminating your obligation to pay it. In Chapter 13 bankruptcy, medical bills are reorganized. This may reduce or eliminate part of the balance. A skilled bankruptcy law firm in Pennsylvania and New Jersey can help you stop medical debt collections, lawsuits, wage garnishment, and even stop debt collector harassment.
Alternatives to Filing Bankruptcy for Unpaid Medical Debt
In addition to the alternatives discussed above, there are a few options.
Medical debt consolidation loans or balance-transfer credit cards can combine multiple debts into one. Credit counseling services can create debt management plans to lower what you owe and stop collections. If balances remain unmanageable, a debt settlement attorney can negotiate lump-sum reductions while avoiding the long-term credit impact of bankruptcy.
Contact Sadek Bankruptcy Law Firm For a Free Consultation
If you owe medical debt or are struggling to pay medical bills, Sadek Law Offices can help. We understand that financial health is important. Surprise medical bills and unexpected costs affect millions of Americans just trying to get medical treatment. Medicare, Medicaid, and health insurance companies don’t always cover high medical costs like they should. We have the knowledge to help clients get insurance coverage, settle billing disputes, and relieve the burden of delinquent medical collection accounts. Financial unpredictability and unforeseen out-of-pocket costs are not something anyone expects to deal with when they’re sick.
Call 215-545-0008 or complete our online contact form to schedule a free consultation and let our experienced attorneys assess your unique situation.