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Rules regarding medical debt collection undergo change

Health care is a necessary part of life for residents in Tennessee, but it is not cheap. Unfortunately, sometimes a debtor finds that they simply cannot cope with the amount they owe in medical expenses. According to the Consumer Financial Protection Bureau, as of December 2014, approximately 43 million people in the United States have some form of medical debt that is being listed on their credit report. In fact, over half of all debt listed on Americans' credit reports is medical debt. However, in March, some new rules took effect that may help debtors with regard to how medical debt affects their credit.

First of all, debtors now have 180 days, or approximately six months, to attempt to pay off their medical debt before the debt can be included on the debtor's credit report. This is especially useful, because it often takes a significant amount of time for insurance claims to be processed and reimbursements to be applied. Therefore, an unpaid bill may not be the debtor's fault.

Debtors should also keep in mind that there can be mistakes on their credit reports. In fact, the Federal Trade Commission estimated that in 2013, about 20 percent of all consumers had some sort of mistake show up on their credit report. Debtors have the right to dispute such mistakes either with the creditor or the credit agency. These entities then have 30 days to report their findings to the debtor. If not, the mistake should be taken off the debtor's credit report.

Furthermore, under the new rules, medical debts that are paid off will cease being listed on the debtor's credit report. This bucks the traditional rule in which all outstanding debts stayed on a person's credit report after being paid off for as many as seven years.

Finally, under the new rules many disagreements regarding a particular debt will not be looked over by computers, but by actual human beings. Automated verifications used to be the go-to method for reviewing a disagreement, but they tended to be inaccurate. Since no two disputes are alike, it is only fair that they receive an individualized review by an actual person.

It is important for debtors to understand the rules that debt collectors and creditors must follow when it comes to debt collection practices. Any changes to these rules should be noted, so that debtors can ensure that their rights are upheld.

Source: Huffington Post, "Credit Agencies To Go Easier On Medical Debt," Shindy Chen, March 24, 2015

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Mark T. Young & Associates
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Hixson, TN 37343

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