Just last week, the Biden Administration touted the new rule, but groups in opposition to that medical debt ban from credit reports stated in court filings that the rule violates the Fair Credit Reporting Act, and that the bureau lacks the authority to issue such a ban.
With the new lawsuits that mean consumers with medical debt will be stuck in the middle. While this plays out in court, Thomas Nitzsche with Money Management International says consumers with medical debt do have options.
"Nonprofit hospitals are required to provide a certain level of care to the community at no charge for people who are income-qualified, and even if you get denied for full charity care, you might get partial charity care, which means that part of the bill might get wiped out and the rest goes on a 0% payment plan."
Holly Springs resident, Elaine Bryant learned about charity care through the non-profit Dollar For, which helps patients fill out and submit hospital financial assistance applications. After accumulating more than $7000 of medical debt from a local hospital, she worked with the non-profit and says it helped get the hospital to write off about 70% of her family's? medical debt, about $4900. The remaining amount owed; Elaine says she was able to pay.
"That was a big relief knowing that, you know, here we are we're at a clean slate."
Charity care is based on income and even if you don't qualify, Nitzsche says sometimes just applying for it can give you more time to pay a medical bill before it goes to collections. He says, "It can extend the amount of time that the billing department is allowed to offer you 0%. So instead of being 0% for 12 months. If you didn't apply for financial care, just the act of applying for it means they can now give you 0% on that full balance for 24 months."
Nitzsche says the worst thing you can do is take no action, as while the medical debt rule on your credit report plays out in court, no matter what the decision, you are still responsible for the medical debt.
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