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Medical Debt Collection Facing Increasing Scrutiny from CFPB

Michael Rapp Dec. 15, 2014

According to the Chicago Tribune and other sources, the Consumer Financial Protection Bureau is placing increased scrutiny on medical debt collection, specifically the way in which such debts are collected and reported.

The CFPB reports that over 43 million Americans have unpaid medical debt, many of which unaware of the debt they owe. In many circumstances, consumers can unknowingly become responsible for paying the bill when issues between medical providers and insurers occur.

Very often, if a medical bill goes unpaid for an extended period of time, medical providers may hand the debt over to third party debt collectors to deal with. If consumers are unable to pay off the debt, it can negatively affect their credit scores, and prevent them from being approved for loans. Collection notices can stay on credit reports for up to seven years.

Common complaints among consumers are that the debt was already paid, or regarding the amount of the debt. One of the CFPB’s major concerns is ”the complex processes by which medical bills are incurred, collected by a wide range of debt collectors and reported to credit reporting agencies can create challenges for consumers.” The CFPB reports that the average medical debt is approximately $579.

Medical debt is different from other types of debt in that medical emergencies are often unpredictable, leading to consumers spending exorbitant amounts of money on procedures. Many consumers assume that their insurance provider will completely handle the billing situation, and are surprised when they are forced to deal with third party debt collectors.

The Bureau is currently fighting to establish a better system that decreases confusion among all parties, and seeks to hold all of those involved in the credit reporting industry responsible for the accuracy of their reports.