People Come First At Our Consumer Rights Law Firm

Proposed Amendments to FCRA for Reporting Medical Debt

On Behalf of | Jan 5, 2013 | Consumer Protection

A bill introduced to Congress this past week would allow consumers who are behind on their medical bills up to 120 days to work out a payment plan with debt collectors prior to the debt being reported on their credit file.  This proposed amendment before Congress, called the Accuracy in Reporting Medical Debt Act, would allow debtors a grace period within which the debtor could prove the debt was inaccurate, work with the medical provider or insurance company to resolve the account or apply for financial assistance to pay off the balance.

If the debtor were to meet the requirements of the Act, the debt collector would be barred solely from reporting the debt to the three major credit reporting agencies, Equifax, Experian and Trans Union for 120 days, no exception, but it may continue its collection efforts.  In a previous post I discussed the Medical Debt Relief Act, a similar amendment before Congress where medical debt must be removed from a consumer’s credit report no more than 45 days after repayment.  Other debts remain on your credit file even after repayment for up to 7 years.  This new amendment is aimed at targeting debt collectors under the FDCPA in addition to the protecting your credit report.  The idea behind these proposed amendments is to alleviate some of the stress consumers suffer associated with unforeseen health issues and the mass of debt ailing health often creates.

The motivation behind this amendment is that proponents say 1 in 10 insurance claims are processed inaccurately and collectors of medical debts use this to their advantage.  Most consumers are not aware of their rights under the Fair Debt Collection Practices Act (“FDCPA”) and may be coerced into making payment on a debt that they don’t actually owe.  The FDCPA, allows a debtor 30 days to dispute a debt but does not require a delay in reporting the debt on the debtor’s credit file.  It simply requires the account to be marked as “disputed” while the collector investigates.  Under the new amendment, debtors would have this 120 day grace period to figure out the legitimacy of the debt or work out a payment plan without the stress of a debt collector reporting the debt and destroying your credit, inevitably making it harder to obtain financial assistance.

If passed, the Accuracy in Reporting Medical Debt Act would work in conjunction with the Medical Debt Relief Act allowing consumers a more opportunity to figure out their finances and avoid the long-term damage of ailing and unforeseen health issues.  If you are having problems with surmounting debt and are being contacted by debt collectors contact SmithMarco P.C. for a free case review.