In the wake of the Great Recession, the number of Americans being contacted by debt collection agencies has increased markedly. In 2005, before the recession, debt collectors contacted 22 million people about medical bills alone. By 2010, this had increased to 30 million, according to a
When you talk to a consumer bankruptcy attorney, you can get useful advice about how to deal with these companies and move toward debt relief. Depending on your specific circumstances, filing bankruptcy may be an important part of your strategy.
Keep in mind that by the time a debt becomes overdue, it becomes hard to avoid consequences. Recently, a consumer-focused research group called the Access Report examined the impact on credit scores of collection actions for unpaid medical bills.
The group estimated that 3.4 million people are still affected on their credit reports by past medical debts that have actually been paid off. The impact on credit scores that this causes can make it more difficult to buy or refinance a house – or take out any other large loan.
Many of the medical bill collection actions that end up on credit reports are for less than $250, according to the Federal Reserve. And gallingly, many of those actions are due to billing errors.
This is a problem both for people with health insurance and those without.
To respond to the problem, Congress is considering a proposal that would require credit-reporting agencies to delete records of paid-off medical debts from credit reports. If passed, the Medical Debt Responsibility Act would give the credit bureaus 45 days to delete these records.
Source: “Medical Bills Can Wreck Credit, Even When Paid Off,” NPR, 3-4-12