Many Americans living in Illinois have medical debt that they struggle to repay. In many cases, outstanding debt balances are reported to credit bureaus, which can wreak havoc with their credit scores and creditworthiness. However, the Consumer Financial Protection Bureau (CFPB) has proposed a new set of rules that would remove medical debt from your credit report.
Medical debts don’t define a debtor
Historically, there has been no link between credit issues related to outstanding medical debts and a debtor’s ability to repay other types of loans. In other words, the presence of medical debt doesn’t mean that you’re less likely to repay a car loan or mortgage. Ultimately, there is no reason why lenders should know about or be able to use it to justify denying credit or offering it at a higher interest rate.
Information may not be accurate
A CFPB analysis of medical debt reporting found significant errors in the information that was passed on to credit bureaus. Among the errors included reporting debts that were already paid or that were incurred by another person. There were also errors related to the amount that was actually owed on a given debt. However, according to the CFPB, this has not necessarily stopped hospitals or other care providers from pursuing debts based on faulty data.
Debt collectors are critical
Debt collectors say that removing medical debts from credit reports might reduce the incentive for patients to pay. This could lead to greater demands for upfront payment or other restrictions that could prevent people from getting the care that they need. According to the CEO of ACA International, it would be better to focus on reigning in the cost of care as opposed to limiting collection efforts.
Unpaid medical debts are the top cause of bankruptcy in the United States. However, it may be possible to resolve one without going this route. For instance, you might be able to negotiate a lower balance or ask for grants or other assistance in your effort to pay an outstanding amount.