Is It Good News Or Bad News That Less Medical Debt Is Showing Up On Consumers’ Credit Reports?
Finally, a piece of good news about consumer finances after a yearslong onslaught of gloom and doom. More than half of American households have $400 or less in savings, which means that the only way they could afford an emergency expense in that amount is by borrowing money or charging it on a credit card, but that is old news, dating back to the days of Occupy Wall Street. In the early days of the COVID-19 pandemic, we heard about how people with salaried jobs and home mortgages were paying down their debts and building up their savings, even while the majority of Americans struggled, but as the pandemic dragged on and prices climbed, even families with a household income of $100,000 are living paycheck to paycheck. The Consumer Financial Protection Bureau (CFPB) recently reported that 20 percent fewer consumers currently have a debt in collections on their credit reports, compared to 2018. Is this a sign of brighter times to come, or are collection agencies just giving way to some newer and more insidious debt trap? If your credit report looks fine, but you are still struggling with debt, contact a Philadelphia debt collection abuse lawyer.
Is It the Calm Before the Storm, or Are Recently Implemented Consumer Protections Doing Their Job?
The disastrous effect of costly medical bills on Americans’ finances is well known; everyone except the wealthiest people has medical debt. In the past few years, several policies have gone into effect to stop the cost of healthcare from wrecking consumers’ health and finances. First, the No Surprises Act reduced the cost of many emergency room visits and medical services rendered on an emergency basis. Second, the CFPB set a new rule where healthcare providers should not report outstanding medical debts of less than $500 to the credit reporting bureaus. Furthermore, patients have a year, instead of just six months, to pay down their medical bills before the outstanding balance appears on their credit report.
An optimist would interpret this news to mean that, even though there are still people who don’t have $20 of wiggle room in their monthly budget to pay down a $300 medical bill from several years ago, this debt will no longer present an obstacle to their credit card applications getting approved. A pessimist, however, would focus on the problems that the new rule does not solve. The fact remains that an illness or injury from which you recover fully can leave you with more than $500 in medical bills, and unless you’re rich, you may not be able to pay the balance down to below $500. It could mean that, next year, this year’s big medical debts will appear on people’s credit reports and start a domino effect of financial problems.
Contact Louis S. Schwartz About Medical Debt
A Philadelphia consumer law attorney can help you find a way to pay down your big medical bills before they appear on your credit report. Contact Louis S. Schwartz at CONSUMERLAWPA.com to set up a free, confidential consultation.