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December 29, 2014 4:39 am
According to a recent report by the Consumer Financial Protection Bureau (CFPB), 43 million Americans have overdue medical debt on their credit reports. Medical debt is incurred differently than other unpaid bills because it can result from an unpredictable event, and consumers are often temporarily responsible for the bill in its entirety before insurance coverage takes over.
“It’s hard for consumers to navigate the medical debt maze and come out with a clean credit report on the other side,” said Richard Cordray, CFPB director. “Getting medical care should not make your credit report sick.”
If a medical bill goes unpaid after a certain amount of time, the medical provider may hand over the account to a third-party debt collector. The majority of collections items that end up on consumers’ credit reports are furnished to the credit reporting agencies by third-party debt collectors. When a collection item ends up on a consumer’s credit report, it decreases the consumer’s credit score. These scores play an important role in the lives of American consumers because most lenders decide to grant credit and set interest rates based on them.
Complicating matters is the medical billing process itself. Challenges include cases where patients are billed multiple bills from multiple providers for one incident or treatment, and instances in which debt collectors “park” medical debts on credit reports as incentive for consumers to pay.
Published with permission from RISMedia.
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