Debt collectors starting to become more lenient on unpaid medical bills

PHOENIX (3TV/CBS 5) - Unexpected, large medical bills are the number one reason why some people are forced to file for bankruptcy. But it turns out some collection agencies are becoming more lenient when it comes to asking you to pay a medical debt.

An unexpected injury or illness that sends you to the hospital can rack up medical bills quicker than you think. In some cases, those unpaid bills are eventually sent to a third-party collection agency for payment. In fact, medical collections constitute 57% of all collections on consumer credit reports; however, the numbers are improving. “Debt collection tradelines in general from $261 million to $175 million. So, there’s a pretty substantial drop when it comes to these medical tradelines,” John McNamara with the Consumer Financial Protection Bureau said.

McNamara says debt collectors pursuing a medical debt have the ability to destroy your credit with the push of a button. “Negative reviews on your credit report can harm you in ways that you don’t even know about,” he said. Those same collectors are choosing not to push that button as often as they once did. McNamara said he believes it’s because if the medical debt is inaccurate, it’s the collection agency and not the medical provider that’s held accountable. Those are grounds for any legal pursuit and can be followed up on legally.

So now collection agencies are relaxing their approach. “That’s the one thing about medical debt tradelines is that the person with the most knowledge is the medical provider. But you got someone else furnishing it,” McNamara said. “It’s kind of like a person walking up to you at a bus stop and handing you a bag and saying, ‘Can you take this to the next bus stop?’ So, it’s like the collector is taking all that risk on behalf of the provider.”

To hear the entire conversation, just click on the On Your Side Podcast.

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