It's no secret that unpaid debts can result in a bad credit score and other collateral consequences, including difficulty refinancing and/or securing a much-needed loan. In fact, many Americans are now seeing their credit scores lowered thanks to a particular form of debt appearing on their credit reports -- medical bills. However, recent research has shown that many people are perhaps being victimized by unfair practices in this particular area.

Consider the picture painted by the following statistics:

  • According to the private foundation The Commonwealth Fund, roughly 22 million Americans received some type of communication from a debt collection agency back in 2005 regarding unpaid medical debt/medical bills. This number grew to 30 million in 2010
  • According to the advocacy group The Access Project, almost 3.4 million Americans have paid off outstanding medical debt/medical bills only to have it remain on their credit reports for up to seven years
  • According to the Federal Reserve, the overwhelming majority of collection actions listed on credit reports are for medical debt/medical bills and most of these are for relatively small sums of $250 or less

What makes matters worse for many Americans is that the long-term appearance of medical debts on a credit report can often be attributed to a variety of factors outside of their control or knowledge.

To illustrate, medical offices may wind up directing unpaid bills to debt collectors due to simple billing mistakes, disputes between medical offices and insurance companies, and misunderstandings concerning insurance coverage.

Needless to say, having unpaid medical debt on a credit report can wreck havoc on a person's credit score and ability to secure a loan.

Fortunately, it appears that some sort of relief may soon be on the horizon.

Federal lawmakers are currently considering legislation called the Medical Debt Responsibility Act that would make it mandatory for all debt collection agencies to remove medical debt/medical bills that have been fully paid off from credit reports within a span of 45 days.

"We're not talking about someone buying a big screen television and not having the ability to pay," said Rep. Don Manzullo (R-Illinois). "This is debt incurred because of a health condition. That makes medical debt unique."

Stay tuned for updates from our San Antonio bankruptcy blog ...

Contact an experienced legal professional to learn more about managing medical debt/bad credit and fighting creditor harassment.

This post is for informational purposes only and is not to be construed as legal advice.

Source:

NPR, "Medical bills can wreck credit, even when paid off" Jan. 3, 2012