An unexpected diagnosis or an accident that leaves you hospitalized can not only be physically and mentally life-changing, but also financially.
People need medical help for a variety of reasons, however, after treatment, some are left with a bill they cannot pay. According to the White House, more than 100 million Americans struggle with medical debt.
Medical debt is often a result of a medical emergency that leads to an unplanned and unexpected expense which could range from a few hundred dollars to hundreds of thousands of dollars. The amount of debt may cripple consumers financially, keeping them from moving on and moving forward with life. But should it?
Public Interest Research Group, PIRG, advocates for regulatory changes to how medical debt impacts consumer credit reports. They argue, since medical debt is often unavoidable, it is different from other types of debt which may be the result of buying a product or service.
Apparently, the Consumer Financial Protection Bureau agrees and is proposing change. CFPB is proposing a rule that would eliminate most medical debt from credit reports. The proposal would stop credit reporting companies from sharing medical debt information with lenders and prohibit lenders from using medical information to make decisions regarding credit eligibility.
"The CFPB is seeking to end the senseless practice of weaponizing the credit reporting system to coerce patients into paying medical bills that they do not owe," said CFPB Director Rohit Chopra in the CFPB press release. "Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans."
In 2022, the CFPB issued a report detailing the impact of medical debt on American families. The report estimated medical bills made up $88 billion of reported debts on credit reports. After the report was released, the three major credit reporting bureaus (Experian, Equifax, and TransUnion) made several voluntary changes that included taking many medical bills off of credit reports.
The CFPB wants to hear from consumers regarding the proposal. To weigh in on the rule, consumers have until Aug.12, 2024, to leave a comment online.
If you have a complaint regarding credit reporting or about financial products or services, go to the CFPB's website or call (855) 411-CFPB (2372).
