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.
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A day after Consumer Financial Protection Bureau Director Richard Cordray told financial industry executives that Congress did not intend to exempt small institutions from most rules, several lawmakers begged to differ.
February 24 -
New York Attorney General Eric Schneiderman is urging banks to reevaluate how they use credit bureaus like ChexSystems, after his investigation found that inaccurate data reported by banks is preventing some consumers from opening checking and savings accounts. Three banks already have agreed to modify their use of ChexSystems in screening potential customers.
April 27 -
JPMorgan Chase will overhaul customer screening procedures to let more low-income consumers open checking and savings accounts under an agreement announced Tuesday with New York Attorney General Eric Schneiderman.
June 30
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.
