Posted on 03/22/2022 11:35:00 AM PDT by Red Badger
Medical debt is an albatross hung around the necks of Americans—but some relief is on the way. Over the weekend, three of the country’s major credit reporting agencies announced they would soon remove most medical debt from their calculation of credit reports, along with other reforms. The decision was preceded by a recent report from the Consumer Financial Protection Bureau that questioned the value of medical debt as a predictor for credit trustworthiness, along with the accuracy of reporting by debt collection agencies.
As first reported Friday by the Wall Street Journal and later confirmed by the companies themselves, Equifax, Experian, and TransUnion will be removing paid medical collection debt from their collective credit score reports by July 2022—about 70% of the medical debt currently tallied in these reports. They will also extend the grace period from six months to a year before unpaid medical debt can end up in a credit report. And come the first half of 2023, they will no longer include any medical debt under $500 on their reports. The net result will likely improve the credit reports of millions of Americans.
In early March, the Consumer Financial Protection Bureau issued a lengthy report looking at medical debt. It found that there was around $88 billion in medical debt listed on consumer credit records as of July 2021 (an underestimate of total medical debt, since not all of it is recorded by collection agencies). That year, medical debt represented 58% of all third-party debt collection tradelines, making it the most common form of debt on these reports. At the same time, the vast majority of individual debts owed were under $500, though some people may have had multiple debts. Past-due debts on a credit report, even if eventually paid, can lower a person’s credit score, making it harder to get a job or secure loans for a business or home purchase.
While credit reports are intended as a barometer for whether someone can be relied on to repay their loans, the CFPB criticized the value of medical debt reporting. Because medical debts are often caused by an emergency and unexpected health situation, they’re “less predictive of future payment problems than other debt collections are,” the CFPB noted. Some newer models of credit reporting do take this into account, but many widely used models still don’t, the agency added. These outdated models are then more likely to negatively impact Black and Hispanic Americans, younger people, older Americans, and veterans, who are disproportionately affected by medical debt. Uninsured people and those who use out-of-network care, sometimes without even knowing, are more likely to have higher amounts of debt.
Collection agencies routinely make people’s lives a nightmare through litigation that can leave their wages garnished or have them sent to jail, the CFPB report found. And sometimes, the report went on to note, debt collection agencies flagrantly report bad information, leaving people’s credit scores affected by debt they no longer owe or never owed—errors that can take years to correct. People with debt or who are simply afraid to accumulate it will also be more likely to avoid seeing the doctor in the future. All of these issues likely worsened during the pandemic, especially once most private insurers stopped waiving cost-sharing for covid-19 treatment by last summer.
In its conclusion to the report, the CFPB warned it would “act to ensure that the consumer credit reporting system is not used coercively against patients and their families in order to force them to pay questionable medical bills.” And in an earlier report this January, the CFPB argued that Equifax, Experian, and TransUnion had not done enough to address customers’ complaints about inaccurate credit reporting, to the point of violating the Fair Credit Reporting Act.
The decision by the big three to remove most medical debt from their ledgers was widely praised by consumer advocates as well as President Joe Biden, though only as a first step. (Some politicians such as Bernie Sanders has called for the abolition of all medical debt and other substantial reforms moving forward.) “This is a step in the right direction, thanks to CFPB. We’ll keep fighting for consumers - from increasing transparency to preventing surprise billing and more,” Biden wrote on Twitter in response to the announcements.
Correction: A previous version of this article misattributed a tweet to Bernie Sanders; it was actually from President Joe Biden. I will now run into the sea.
Well this is worth looking into.
“This is a step in the right direction, thanks to CFPB. We’ll keep fighting for consumers - from increasing transparency to preventing surprise billing and more,” Biden wrote...
Well if Sir Shitz A Lot is for it there’s your first red flag right there. Something nefarious about this.
meanwhile, even the very best lenders are finding that FICO and credit bureau reports are becoming INADEQUATE data to base their lending decision on
(some other entries were eliminated not too long ago, too, and so the banks have to raise their loan interest rates or charges to compensate for the added risks they are being forced to take)
Check your Credit Score!
If yours suddenly went up, it worked!..........
I keep getting these small bills from doctors associations that are very annoying, and it seems like I have paid the same bill multiple times..............
I worry they are just looking for ways to sell more loans to more people. This is how the housing market crises was created.
I was discussing this with my husband when it was reporting in the WSJ recently. He pointed out that one reason medical payments end up as a negative on people’s credit reports is that practitioners often bill you before your insurance company has processed the claim. You can either wait until the third time they bill, when you might see the actual amount you owe, or pay the first time and spend a lot of effort trying to get refunds after they collect from the insurance company.
It’s not a big deal for us, because we’re not trying to borrow, but people who are trying to rent an apartment - credit check! - can find their credit score is low even though they paid their bills when they finally figured out how much to pay.
How to create bubbles 101.
I keep getting these small bills from doctors associations that are very annoying, and it seems like I have paid the same bill multiple times..............
Same here. Every 6 months I go to the same doc. I either have a credit for a small amount or owe a balance.
When I have to schedule a procedure they call and request payment. I pay in full. Then a month or few weeks later someone else from the office calls requesting payment.
Already paid I tell them. They hang up and never call back till the next time…
I thought it was captain Shitz A Lot.
And it’s always small, odd amounts like $24.36 or $37.56...............................
Applicant(s):
Please carefully review your attached credit reports to see if they list all your debts due over 30 days.
Then, please initial the following if applicable:
Case 1: I/We, the applicant(s) certify that there is no debt that we owe that is more than 30 days past due which is not included in the attached credit reports.
Applicant(s) signature(s)
________________________
________________________
Case 2: I/We, the applicant(s) certify that the following debt(s) that we owe that is/are more than 30 days past due are the only one(s) not included in the attached credit reports:
Debt 1 amount_______ party owed_________
Debt 2 amount_______ party owed_________
.....
Applicant(s) signature(s)
________________________
________________________
Credit ratings should have never included Medical bills, since they are not planned events..................
Random small amounts but multiplied by how many people were sent those bills?
The number is probably mind boggling.
That’s what I’m wondering, hundreds if not thousands..................
If it is the same number then it is the same bill.
When you pay you should note the day you paid and how on the bill its self and keep it in your records for the month.
Medical bills are a deductible expense come tax time.
Let me tell you a story...
I once had a doctor who had another patient with the same first and last name as me. And his birthday was in the same month. That other patient owed lots of money to lots of people and had lots of health problems and was unable to pay all his bills (he ended up dying from his health problems but that happened a couple years later)
I kept getting phone calls and threatening letters in the mail and I did not know why. A half a dozen different collections agencies were trying to collect on the same bill. And this was repeated for several different bills. One day I got a phone call for an unpaid bill for the doctor I was literally seeing when the phone call came in.
I told the collector I was at the very doctor who he claimed to be collecting for and to hold on while I hand the phone to the doctor.
The doctor was livid. He screamed at the collector that there was an exclusive contract for collections with a very specific agency and this particular collector had zero legal authority to collect anything on his behalf. AND...this is when I learned about the other patient with the same name...he then went on to scold the fool on the line telling him he was harassing the wrong patient.
When he ended the phone call and handed back my phone he went to his office and closed the door and I could hear through the door him screaming at his collections agency about the phone call he just had on my phone. I heard him say “If I ever find out you are selling my contracts to other agencies you will be sorry”.
Wait and see if the liberals running the CFPB create another subprime mortgage catastrophe....
https://www.compliancecohort.com/blog/what-is-digital-redlining-in-lending
Sometimes they are all part of a billing entity and the only thing different is the account number. So its easy to get a bill from a different doctor, just go to bill pay for Standard Medical Group, click pay and think you are paying it. You paid the account number of the last doctir seen.
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