A new study suggests Americans are drowning in medical debt. The study, released earlier today by the Consumer Financial Protection Bureau, highlights the fact that many consumers don’t even know they owe money for medical expenses until they get a call from a collections agency, or they see it on their credit report.
“Getting medical care should not make your credit report sick,” said CFPB Director Richard Cordray. But, for some, that’s exactly what it’s doing. The CFPB found 43 million Americans have unpaid medical debt on their credit reports. It also found that more than half of all debt on credit reports is from medical bills from hospitals and other providers.
It’s hard to believe that despite those staggering numbers, the majority of medical debts on a consumer’s credit report tend to be on average $579. That’s a huge difference compared to unpaid credit card bills, which can sometimes skyrocket into the thousands.
Medical debt is a whole lot different than other unpaid bills because it often results from an unexpected accident or sudden illness. “It’s hard for consumers to navigate the medical debt maze and come out with a clean credit report on the other side,” said Cordray. If a medical bill goes unpaid for a certain amount of time (which could be anywhere from 30 to 180 days), it eventually ends up in collections. And, once that happens, a consumer’s credit can be severely affected. Typically, a collections item can stay on a credit report for up to seven years. Imagine the frustration when a consumer sees a collections account, has no clue what it is, and then tries to dispute it.
To better address the concerns associated with medical debt and credit reports, the CFPB is asking consumers to keep records of their medical bills and dispute any inaccurate medical debts. The CFPB is also asking Equifax, Experian and TransUnion to provide regular accuracy reports to the CFPB on how consumer disputes are being handled.
For more on medical debt and how to keep it in check, check out: 7 ways to keep medical debt in check
Do you have unpaid medical debt on your credit report? Head to theimk.com to find out today.