In general, it’s not helpful to think of the statute of limitations for a particular debt as the finish line that you have to cross. Under the Fair Credit Reporting Act, debts can generally appear on your credit report for seven years and in some cases longer. This is because, according to Fox, they don’t necessarily view medical debt as an indicator of credit risk. If you don’t pay a secured debt, such as a car loan or mortgage, foreclosure and redemption are the most common approaches for creditors to recover losses.
However, if the verdict remains unpaid, a creditor can ask the court to renew it, which may continue to have a negative impact on your credit.
Will bad debts decrease after 7 years?
Even after the unpaid medical debt is added to your credit report, it may not affect your overall credit score as much as other collection accounts. Although most negative information such as foreclosures, defaults, and compensation payments will fall out of your credit report after seven years, the debt still exists and lenders can still try to collect it.
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Barry Ritholtz is a renowned finance expert, author and blogger. With over 30 years of experience in the financial industry he has gained a reputation as a thought leader and influencer in the investment community.