Medical bills on credit reports are a huge problem for millions of Americans. Federal Reserve researchers found that over half of collection agency accounts and nearly one-fifth of lawsuits that show up as black marks on credit reports are for medical debts!
Are you one of those individuals with medical collections on your credit? Perhaps you were not able to pay a medical bill because you were uninsured, underinsured or because you had fallen on tough times. Or, maybe your debt was sent to collection while you were trying to get answers to things that confused you about a medical provider’s bill before you paid it. Or maybe you never even knew you owed the medical provider until a collection agency contacted you!
Whatever the reason, the collection account is probably showing up in your credit reports, where the federal Fair Credit Reporting Act says it can remain for 7 years, even if you’ve since paid or settled the debt. Your credit scores may have taken a dive because of that negative information and you may have found it more difficult, if not impossible, to finance the purchase of a home, new vehicle, or some other big-ticket item.
Some facts about medical debts on credit reports:
Now however, relief may be in sight if a new bill recently introduced in the U.S. House of Representatives becomes law. The bill is called the Medical Debt Responsibility Act (MDRA) of 2011 and it’s being sponsored by a bipartisan group of Congressmen.
The MDRA will offer relief for those with medical debts on their credit reports. It says that once you pay off or settle a medical debt of $2,500 or less that was sent to collections, the debt must be removed from your credit reports within 45 days. Supporters of the legislation argue that having medical debt in collection is not a good predictor of how well a consumer will manage new credit. They also argue that if the bill becomes law, it will help stimulate the economy because more consumers will be able to qualify for mortgages and finance other major purchases.
Do you support the Medical Debt Responsibility Act of 2011? Then make sure you: