Oregon’s Senator Jeff Merkley, along with Senators Chuck Schumer (D-NY), Robert Menendez (D-NJ) and Sherrod Brown (D-OH), asked Consumer Financial Protection Bureau (CFPB) Director Richard Cordray to begin addressing the harmful impact of medical debt collections and reporting on consumer credit. In a letter sent Thursday, the four Senators detailed the costs imposed on consumers and the economy by unfair medical debt collections and reporting and requested that the CFPB consider regulatory action to address these problems.
The medical debt collection process is riddled with informational and administrative problems, inflicting serious damage on the credit reports of millions of creditworthy consumers. Unlike most other debt, medical debt is often incurred unexpectedly, and given the complexity of the insurance process, health providers frequently send bills to collections before patients even know that they are personally responsible for paying. Because of these factors, medical debts are less accurate predictors of a consumer’s creditworthiness than other debts, making their presence on the credit report unfair to consumers and unhelpful to lenders. But even if a patient pays off a debt immediately after being notified, once it has gone to collections, that black mark can remain on his or her credit score.
The Senators are also co-sponsors of the Medical Debt Responsibility Act, which would require credit ratings agencies to remove medical debts from consumers’ credit reports no later than 45 days after they have been settled or paid in full.
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