The Consumer Financial Protection Bureau (CFPB) is reportedly in the process of drafting regulations aimed at erasing unpaid medical debts from credit reports, a move that could potentially enhance loan, housing, and job prospects for those affected. This development comes amidst a backdrop of rising medical debt among insured adults in the United States, with a report from the Peterson Center on Healthcare and KFF indicating that approximately 16 million insured adults grapple with over $1,000 in medical debt due to high out-of-pocket costs.
Industry groups, such as the Consumer Data Industry Association, are however expected to resist these proposed changes. Despite this anticipated opposition, similar laws have already been enacted in states like Colorado and New York.
In 2021, over half of third-party debt collections on credit reports were attributed to medical debts. The complexity of medical billing often leads to errors and disputes, leaving many individuals burdened with incorrect charges. In response to this issue, major credit bureaus including Equifax (NYSE:EFX), Experian (OTC:EXPGF), and TransUnion (NYSE:TRU) have begun excluding certain types of medical debts from reports. This action has occurred amid a legal challenge to the CFPB's authority.
In light of these developments, experts advise individuals to consider patient assistance programs, exercise caution with credit card debt and actively dispute incorrect medical collections. The proposed changes by the CFPB could significantly alleviate financial pressure on many Americans dealing with unpaid medical debts.
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