Senate Bill Would Separate Out Paid Medical Debt from Credit Reports

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WASHINGTON — Democratic senators introduced a bill Thursday that would separate out medical debt from other types of consumer debt for credit reporting purposes.

"Medical debt should not be lumped into the same category as credit card debt and purchases consumers willingly make," said Sen. Richard Blumenthal, D-Conn., who introduced the bill along with Sens. Jeff Merkley D-Ore., Dick Durbin, D-Ill., and Bob Menendez, D-N.J.

"This practice has long legs, even after debts are paid, preventing consumers from buying a home or a vehicle and limiting financial opportunities," Blumenthal added.

The Medical Debt Relief Act follows a settlement between New York Attorney General Eric Schneiderman and the big three credit reporting agencies who agreed to remove medical debt from a consumer's credit report if it is paid off by an insurance company. The bill would go further by also removing debt from the credit report that has been settled or paid off by the consumer.

"No American should be denied the opportunity to buy a home or a car simply because they had the misfortune to need medical care," Merkley said. "Removing paid-off and settled medical debts from consumer credit reports is a win-win for both consumers and our economy."

The bill has also been introduced in the House by Rep. John Carney, D-Del., along with a group of bipartisan co-sponsors.

The sponsors of the Senate bill contend that medical debt is often the result of an unexpected event and therefore lacks a real predictive value for the credit reporting agencies.

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