Texas residents may be aware that medical bills can sometimes continue to have an impact on credit scores long after they have been settled or paid off, and this may make borrowing more difficult to obtain and more expensive to pay back for consumers. The Medical Debt Relief Act was introduced in February 2016 by five Democratic senators, and it has also been submitted with bipartisan support to the U.S. House of Representatives. The legislation is supported by dozens of organizations across the country including groups advocating for the rights of patients and consumer watchdog associations.
The senators maintain that special rules should be put into place for medical debt for two main reasons. They say that this type of debt is not usually taken on intentionally, and consumers are rarely able to plan for it in the way that they would for other major expenditures. Medical bills may also be left unpaid for significant periods while charges are disputed by insurance companies, and this may lead to collection efforts being initiated against patients automatically.
The proposed legislation was inspired by an agreement entered into by the nation's three major credit reporting agencies and the attorney general of New York. Transunion, Equifax and Experian agreed to remove medical bills that patients or insurance companies have paid off and to wait 180 days before placing this type of debt on credit reports.
Figures from the Consumer Financial Protection Bureau reveal that about 43 million Americans have overdue medical bills, and many of these consumers are facing debts that they may never be able to repay. Bankruptcy attorneys can point out to their clients that filing under Chapter 7 or Chapter 13 can provide an opportunity for a fresh financial start and requires collection activities to immediately cease.