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Possible changes ahead in medical debt collection

Residents of Ohio who are facing high medical bills may be interested to learn that the Consumer Financial Protection Bureau has been looking at how this type of debt is reported to credit agencies. The federal agency is being pressed by consumer groups to look further into the issue and has also assembled its own report on the topic, held a hearing and focused on it in a meeting of the Consumer Advisory Board.

At the hearing, the bureau's director announced that 20 percent of people who have credit reports have a medical debt on those reports and that in many cases it is the only item. The amount that people owe also tends to be low by collection standards.

At issue are confusing medical billing practices and the speed with which medical debt appears on credit reports. This can occur in as little as 30 days, and meanwhile, the invoices may still be wending their way through a complicated maze of insurers, providers and billing departments. In some cases, consumers may not even be aware that they owe anything. According to the bureau, it is possible that medical debt collectors are using credit reporting as a way to enforce payment. Due to these and other concerns, the bureau may make new rules for the collection of these types of obligations.

Those who are struggling with medical debt may want to obtain the advice of an attorney. It is possible that some collection practices that they have been forced to endure are illegal. In some cases, they may also want to consider filing for bankruptcy if they are having difficulty meeting their obligations along with their regular living expenses. Filing for bankruptcy can have the collateral effect of temporarily halting all collection activities.

Source: Inside, "When considering medical debt collection rules, CFPB looks at consumer impact," Patrick Lunsford, April 7, 2015

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