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Congresswoman Calls for Hearing on Medical Debt Legislation

June 11, 2014
In The News

The request for discussion of the bill, introduced by Rep. Maxine Waters last year, is in connection with CFPB research on the effects of medical debt on consumers' credit scores.

Following the May 20, 2014, Consumer Financial Protection Bureau report on findings that consumers' credit scores may be overly penalized for medical debt, Rep. Maxine Waters (D-Calif.), called upon House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas), to hold a hearing on the issue and her proposed legislation to address the problem.

The bureau's research shows that credit scoring models may underestimate the creditworthiness of consumers who owe medical debt in collections. The scoring models also may not be crediting consumers who repay medical debt that has gone to collections.

"I welcome today's report by the Consumer Financial Protection Bureau showing that medical debt often has a disproportionate impact on the creditworthiness of consumers," Waters said. "Illness or injury is often random and unavoidable. The unexpected medical costs that follow only serve to add additional complications to an already difficult situation. I believe that ensuring such costs do not harm a consumer's ability to borrow money and purchase goods is a matter of basic fairness."

In 2013, Waters introduced legislation that would require consumer reporting agencies to remove any information related to fully paid or settled medical debt from a consumer's credit report within 45 days. The Medical Debt Responsibility Act (H.R. 1767) would ensure that consumers are not arbitrarily penalized by medical debt once it is fully settled or paid.

Under current law, medical debt information is generally retained on a credit report for seven years, according to Waters. The legislation recognizes that medical debt is unique and therefore does not impose an arbitrary dollar cap on the amount of medical debt that can be removed from a credit report.

ACA International is following the House Financial Services Committee's oversight of the CFPB and will provide updates on any hearings about the medical debt legislation and report.