I'm a responsible credit card user. I pay my bills on time, never make large purchases on impulse, and have an emergency fund to provide extra cushion. I draw up budgets and stick to them (for the most part), and occasionally take a hard look at my household's debts and assets to make sure we're on the right track for the long term. In short, I'm a financial control freak.
But there are plenty of things I can't control when it comes to my finances. The largest of these may be medical catastrophe. And I'm not just talking about a broken bone or a nasty flu. I fear the health problems that deal a deadly blow to your emergency fund, the chronic conditions that can max out your credit card limits, the medical emergency that could take me by surprise at any moment.
Cancer treatment, back surgery, heart problems...all of these and more put thousands of Americans into 5- or 6-digit debt. It just doesn't seem fair that someone battling a serious health problem also must cope with a wrecked credit score and debt collectors knocking on the door.
A new piece of legislation on the table in Washington, if passed, would lessen the impact of medical bills on our credit scores. Currently, unpaid medical debts are treated just like any other collection account: Even after being paid off, they continue to harm our credit scores for up to seven years. 12 representatives of Congress are spearheading the Medical Debt Relief Act which would put an end to this practice. If this amendment to the Fair Credit Reporting Act is passed, it would:
The bill doesn't provide any relief for your current medical bills; those debts will continue to affect your credit rating as they always have. But the Medical Debt Relief Act would ensure that once you've paid off or settled a medical debt, it would no longer continue to harm your ability to secure a good mortgage or other loan.
"Debt from medical expenses isn’t like buying a big screen television on a credit card, but it is being treated in exactly that way by the credit bureaus even when it is paid off. People shouldn’t have their credit worthiness suffer because they got sick or injured," US Rep Mary Jo Kilroy says.
For more information about how to keep medical bills from affecting your credit, check out these related links:
Don't Let Medical Bills Ruin Your Credit
Medical Credit Cards: Should You Get One?
What You Should Know About Medical Identity Theft
Comments
This is the first I'm hearing
Submitted on August 22nd, 2009 by Shawanda (not verified)This is the first I'm hearing of this legislation. I haven't read it, but here are some of my concerns I hope the bill addresses.
Are delinquent medical bills suggestive of a persons ability and/or willingness to pay other debt?
If they get sick again, will they be able to generate enough income to repay their creditors as agreed?
Did these medical bills result from poor financial planning, i.e., inadequate health insurance or savings? There are a large number of people who qualify for affordable health insurance. They just refuse to treat it as a priority. My heart goes out to all those who really don't have any affordable options.
What other bad debts resulting from unforeseen circumstances (divorce, job loss, death of a spouse) should be treated more favorably in our credit reports?
Good questions, Shawanda. You
Submitted on August 24th, 2009 by Carrie DavisPost new comment