I was reading the St. Pete Times when I came across the business section recently. In a short story the headline stated "Medical debts may torpedo credit scores". Tell me something I don't know. For the last 12 years (yes, it started when I was a minor), I've been fighting with medical collections companies over my credit reports - not only in a few unpaid bills, but on paid ones as well. They talked about the Medical Debt Responsibility Act. Feel free to surpass the personal items to get to the legislation discussion.
Click on headline for more after the jump
My first battle came when I was 18 and went to apply for my very first small loan. I was shocked to learn that when I was 15 years old, somehow between my divorced parents and insurance, two bills of around $500s were on my credit report. This is illegal. Under 18, no collections can be placed against services rendered to a minor. I wrote personally to the companies, but couldn't provide any information since the only thing I had to go on was a charge on my credit report, I didn't even know when services happened. I had to go through 6 months of phone calls, sending proof of age, sending my parents social security numbers and jumped through several hoops. It was finally cleared. I thought I was in the clear. However, my teenage naive was soon to be ripped apart.
Over the course of the next couple of years through bearing a child, a couple of illnesses and being under military medical insurance known as TriCare, I kept getting these tiny bills, which were not my responsibility. As referrals for TriCare, I was supposed to have zero liability. Imagine my surprise when going for my first credit card when there was several bills, each under $100 which were on my account. Never had I been billed and it turned out, two of the hits were over the same bill that had been sold a possible (I never got a straight answer) four times in one year. I had paid one I did know of and had to send proof of payment... three times. By this time, my credit was again, back to spotless.
Circumstance led me to have to take TriCare's PPO plan, in which I could see off base doctors but had a deductible. I needed proper care and the base hospital was renovated then shut down for most family services. OB/GYN services was an hour away and just not feasible. I was under referral for endometriosis. I kept having miscarriages and I needed to be cared for fully. When this happened, it also meant my ER visits boiled down to deductibles.
From two ER visits in close time frame, I got a lovely eight medical bills. You see, an ER visit was billed to the doctor (not "a part" of the hospital), radiology (not "a part" of the hospital), respiratory (not "a part" of the hospital), the nurse staff (not "a part" of the hospital), and then the stay at the hospital itself (the only part of the hospital apparently). So needless to say, I was billed eight different ways total. The hospital had sent one bill out, radiology didn't even collect themselves so they sold the debt immediately to a "fake" law firm who is constantly under investigation and paying fines for lying about being lawyers or filed lawsuits, and the rest - who knows. What I do know is that, even though at the time, I hadn't moved, changed addresses or anything of the sort - the time came for my annual credit check and *thwap* all on my credit report. Now, all these bills, except one, were under $100. Turns out, it had lowered my credit score almost 80 points. If I had needed credit for a home or car, it could have cost me extra fees and higher interest rates. I went about the shuffle.
It took almost three years. One bill was sold as many as 12 times over 2 years. I tracked and tracked and tracked, sent payments that were rejected because they had already sold it. Every time it changed hands, a new hit would come on my credit report. Magically, these companies have not had to prove any valid debt before putting it on there and it could take six months or more for the last company that sold it to disappear from my credit report. In the meantime, it bounces around getting higher.
I now have seven collections for three accounts (or so it appears, I don't know) from the same company for the same debts. They refused to validate the debts on one I finally got a bill for (at the current address) and I've never seen the bills for the others. I attempted to dispute. All they had to do was say "Yep. We have an account." and it stayed on the credit report an they do not have to try to contact you before putting it on your credit report. I don't have the account numbers or date of services so they won't speak with me. There's nothing I can do at all and because of them (thanks, at least now, universal default is illegal) my credit score is shot and there's absolutely nothing I can do about it. Thankfully, I don't really need credit but if I wanted to buy a house now or a car... I'd either be denied outright or given double or triple the interest rate paying hundreds or thousands more. Is that really fair when someone is willing to pay debts but can't because of all the red tape and a company's refusal to send information (quite possibly to allow bills to increase by way of fees and interest to resell the debt?).
In 2010, 30 million Americans were contacted by collection agencies for unpaid medical bills and billing that is error-prone and confusing to consumers. (Source, InsideArm, by way of Commonwealth Fund)
I urge you to contact your state representatives here. This affects more people than you can possibly imagine. Some estimates peg that as many as 80% of people will have a medical collection on their record in their lifetime. Commonwealth Fund said in 2008, more than 28 million Americans were contacted for medical collections. So we've added another two million people into the foray.
The current proposal is here. (Click the word here for link.) An imperative item makes it that any medical collection under $2500 that is paid must fall off the credit report within 45 days.
You can write to your Representatives here.
You can write to your Senators here.
I personally would like the act to go farther and ask them to make a change stating that a collection company cannot resell an account they bought for a minimum period of 180 days. This will make the debt much easier to track, give consumers a period of time to get the bill and get a payment in before the collection is sold again.
If writing is not your strong suit, feel free to copy and paste the following into a browser or email and edit how you choose.
Dear (insert your Congresspersons name here),
I am writing to show my support for the Medical Debt Responsibility Act. Many Americans are facing tough times and medical collections are slowing down our economy by often unscrupulous means. Many of these companies are often predatory or simply don't exist for the means to clear up bills. Many collections companies have made agreements with people to remove credit files after payment but refuse to adhere to the set forth agreement even with complete documentation. Currently, the big three credit companies will not allow these agreements, even in writing, to remove medical collections. The burden of proof lands heavily on citizens who sometimes have no access to account information, total charges, or going through hours and days of letter writing, hoping someone at a credit bureau will see their plight and correct or remove paid accounts that shouldn't have gotten on credit reports to begin with.
Collection amounts can start at a few dollars and up. These especially small collections, under $2500, which this act intends to address, can add up to thousands upon thousands of lost dollars for many people and families of our country.
I would like this act passed but I would also like provision to help the regular American "catch" their bills by asking that Congress require collection companies to hold the debt for a minimum of 180 days. Many collection accounts can be bought and sold numerous times per year, making it difficult to pay the balance and putting the original losses on the provider while the others resell each account with fees tacked on.
Please show your support for the Medical Debt Responsibility Act. This could propel the economy by allowing people to address these collections properly, putting money in the hands of the creditors, money into the hands of citizens to purchase large items with credit such as homes and cars. Increases in payments could also mean more citizens calling in to pay debts, thereby creating jobs for collectors for willing citizens to take care of their debts.
(Insert Your Name and Address here)