The Biden administration plans to eliminate medical debt from the credit reports of millions of Americans. Which could

The Biden administration announced a new rule proposal Tuesday to erase medical debt from credit reports, which could help about 100 million Americans who are struggling to pay their medical bills. The new rule, proposed by the Consumer Financial Protection Bureau (CFPB), aims to provide relief to patients who have had difficulty getting approved for a loan, renting an apartment, finding a job and being able to afford allow for basic necessities due to medical debt. . The CFPB is a government agency whose goal is to make financial markets fair for Americans.

“The CFPB seeks to end the senseless practice of using the credit reporting system as a weapon to coerce patients into paying medical bills they do not owe,” said CFPB Director Rohit Chopra . in a press release. “Medical bills on credit reports are too often inaccurate and have little or no predictive value when it comes to repaying other loans.”

Here’s what the new proposal could mean for you and your wallet.

What’s happening?

The bureau’s expected proposal advances an initiative by Experian, Equifax and TransUnion in 2022. Consumer reporting agencies medical debt removed that were retrieved from credit reports once they were paid off and medical debt balances were eliminated less than $500. The new rule erases medical debt from all credit reports in the United States for the rest of time. 15 million Americans with $49 billion in unpaid medical debt in collections.

According to the new proposal:

  • Consumer reporting companies like Experian, Equifax and TransUnion would be prohibited from including medical debt and collection information on credit reports. Creditors use this information to make underwriting decisions – a crucial practice in the mortgage process that determines whether a person gets approved for a loan.

  • Lenders would be prohibited from repossessing medical devices as security for a loan and if people are unable to repay the loan.

  • Debt collectors would be prohibited from demanding payments for inaccurate or false medical bills, a problem many Americans face. filed a complaint with the CFPB. Inaccurate medical bills are often the subject of disputes between patients and billing services that can last for years.

The CFPB, Department of the Treasury, and Department of Health and Human Services have requested public comment to try to understand “medical credit cards, loans and other financial products used to pay for health care” and the effects these products can have on patients and the health care system. The rule, if finalized, likely won’t take effect until 2025.

Vice President Kamala Harris also called on cities, states and hospitals to cancel their debt during Tuesday’s meeting. press call to announce actions.

What could this mean for you?

Millions of Americans who have medical debt in collections, which is hurting their credit score, could get a score increase of an average of 20 points under the new plan, when the debt is erased.

Medical debt is the largest…

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