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Unpaid medical debt may not go away after being settled

As many Tennessee residents are no doubt aware, in this tough economy, many people have lost their health insurance when they have lost their jobs. Health care reform is supposed to address that, but it remains to be seen if it will work or be repealed. In the meantime, many people have mountains of medical debt piling up that they are unable to pay back.

A few U.S. senators are trying to do something about aggressive medical debt collection and the effect it can have on someone's credit rating. The four Democratic senators are asking the Consumer Financial Protection Bureau to address the issue through its power to issue regulations to promptly spare consumers.

In their letter to the CFPB, the senators said that medical debt is more prone to errors than other kinds of debt, and that some medical debt can already be in collections before a patient knows they know anything.

The senators are also sponsoring a bill that would require credit rating agencies to remove outstanding medical debts from credit reports within 45 days of the debt being settled. If a medical debt goes to collections, it can remain on a credit report for up to seven years, even if it has been settled. A bad credit rating can hurt a person's ability to buy a car, get a loan or rent an apartment.

Being saddled with medical debt is bad enough, but being unable to get rid of its effect on your creditworthiness is even worse. Consumers shouldn't be stuck with a "black eye" for years because of an unforeseen medical emergency.

Source: Office of U.S. Senator Robert Menendez, "Menendez, Senators Ask Consumer Financial Protection Bureau To Address Medical Debt Reporting," Aug. 3, 2012

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