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Published: March 2010

Debt collectors should not use paid medical debt to determine credit worth

Consumer Action sent a letter to Representative Mary Jo Kilroy supporting H.R. 3421, a bill that prohibit debt collectors from using settled or paid off medical debt in assessing credit worthiness.

Below is the full text of the letter:

Consumer Action (www.consumer-action.org) is pleased to support The “Medical Debt Relief Act of 2009” (HR 3421) which would amend the Fair Credit Reporting Act to prohibit consumer credit agencies from using paid off or settled medical debt collection in assessing a consumers credit worth.

More adults are struggling to pay medical bills and are accumulating medical debt, according to the Commonwealth Fund, a research foundation that studies health care issues. The Commonwealth Fund found that the proportion of working-age Americans who accumulated medical debt climbed from 34 percent to 41 percent, or 72 million people, between 2005 and 2007.

Thank you for your response to this issue. Consumers should not be unfairly penalized for medical debts, especially those that have been resolved. We especially support the provision that would give creditors and credit rating bureaus 30 days from the date the medical debt collection is paid off or settled to expunge the collection record from the consumer’s credit report.

Responsible consumers deserve the right to start fresh, and to seek new credit when and where they need it, without the negative lingering effects of a debt they have resolved continuing to haunt them.

As you so correctly point out, while health care costs have increased, so has medical debt. In fact, 60 percent of those with medical bills and debts were insured at the time they assumed the debt. These debts have presented challenges to those consumers trying to buy a home and could cost responsible consumers thousands of dollars in increased APRs, points and closing costs.

Consumer Action thanks you for your leadership on this issue. We will work to drum up support on this important legislation among your fellow Representatives.

Lead Organization

Consumer Action

More Information

H.R. 3421

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