5 takeaways from new federal medical debt collection report

Medical debt complaints accounted for 15 percent of all debt complaints received by the Consumer Financial Protection Bureau in 2021. 

The federal agency charged with ensuring U.S. consumers are treated fairly by banks, lenders and other financial institutions, released a report examining medical debt complaints April 20. 

Five takeaways:

1. Complaints fell into two primary categories. 

The first was consumers reporting that the debt being collected was already paid, does not belong to them or is otherwise incorrect. The most common complaint was about attempts to collect a debt that the consumer said was not owed. 

The other was consumers reporting that collection notices either did not contain sufficient information to identify and verify the debt, or the notices contained too much information, such as personal medical information. 

2. Consumers said their credit reports were being used as "weapons" to force payments. Some reported becoming so frustrated trying to resolve allegedly unpaid bills that they gave up and paid the debt collector. 

3. Many submitting complaints said they only realized the bills were in collection when they checked their credit report or when they were applying for credit. The Consumer Financial Protection Bureau said this coercive use of the credit reporting system by debt collectors is an illegal but common tactic, especially for error-prone debts like medical bills. 

4. The agency received several complaints from people whose debt stemmed from a COVID-19-related emergency department visit. These people said they were told or assumed their care would be covered under CARES Act provisions. 

5. The Consumer Financial Protection Bureau said the findings in the report support its previous research that found medical bills are less predictive of future repayment than other bills or credit obligations.

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