The Accuracy in Reporting Medical Debt Act would provide consumers in New Jersey and the rest of the country with 120 days to resolve their medical health debt issues before the debt collectors could report them to a credit reporting agency. This amendment to the Fair Debt Collection Practices Act would make debt collectors wait on reporting harmful credit information that could stay on a consumer’s credit report for up to seven years.
Consumers would have to show that they were actively working with an insurance company to resolve the medical debt issue, that they had no knowledge of the debt or that they were in the process of disputing the debt. As part of the 120 days, collectors would give consumers 30 days to respond to their collection efforts before they could report the negative information if the consumer fails to respond. Since the 30 days would be included within the 120 days, consumers would not be encouraged to wait to respond to the debt collectors.
While collectors could still continue to attempt to collect the debt during the 120 days, consumers would be given more time to resolve these issues, which often harm credit history. Additionally, it would give consumers more time to resolve medical debt issues that are a result of incorrect information or misreported information.
This act would work with the Medical Debt Relief Act, to help consumers manage their healthcare related debt before and after it has been paid, which could help them avoid long term damage to their credit history. Consumers who are struggling under overly large amounts of healthcare-related and other debt could benefit from consulting a bankruptcy lawyer who may guide them through the choices available such as filing for Chapter 7 bankruptcy and getting a fresh start.
Source: Consumerist, “Legislation Would Give Consumers 120 Days To Resolve Medical Debts Before Dinging Credit Reports“, Chris Morran, June 28, 2013