A new rule proposed by the Biden administration would eliminate medical debt from credit reports, a move highly opposed by investors and the debt collection industry, reports the Washington Post.
The rule change, announced by the Consumer Financial Protection Bureau (CFPB) on June 11, would prevent almost any medical debt from appearing on credit reports. In a statement, the CFPB said medical bills “have little to no predictive value when it comes to repaying other loans.”
According to the CFPB, approximately 15 million Americans are burdened with medical debt, totaling $49 billion.
“Medical debt makes it more difficult for millions of Americans to be approved for a car loan, a home loan or a small-business loan, all of which, in turn, makes it more difficult to just get by, much less get ahead,” Harris said in announcing the proposal. “And that is simply not fair.”
The debt can have significant consequences, leaving people with fewer options for loans, credit cards and housing.
Jack Brown, former president of the industry trade association ACA International, and president of Gulf Coast, a family-owned debt collector in Florida, says the rule would have costs.
“If there are no consequences for not paying … then why are you going to pay?” he told the Post.
Added Hallee Morgan, an attorney for the American Bankers Association: “To ensure their loans will be repaid … banks must have complete information about an applicant’s assets and liability.”
Meduit, a collection agency for over 1,100 hospital and large physician practices in 48 states, is a major opponent of the new rule.
“As consumers ourselves, the soundbite idea of medical debt never affecting our overall financial health again sounds great, but it is not accurate,” according to comments the company submitted to the CFPB.
Solange Reyner ✉
Solange Reyner is a writer and editor for Newsmax. She has more than 15 years in the journalism industry reporting and covering news, sports and politics.
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