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New bill could ease effect of overwhelming debt on credit scores

Medical debt is a common cause of financial hardship in the U.S. Debt from medical bills usually occurs unexpectedly, which can be devastating to consumers in Texas and elsewhere. This commonly results in overwhelming debt, which can negatively affect consumer credit scores. However, a few senators recently proposed new legislation that would decrease the impact of medical debt on credit scores.

The Medical Responsibility Act aims to keep credit rating companies from using paid off or settled medical debt to lower credit scores. The proposed new law has the potential to help 75 million Americans. Medical debts often occur through no fault of the consumer due to being slowed down by a lethargic insurance administrative process.

Providers typically bill insurance companies first, which can cause consumers to first hear about the debt owed via collection agency. This can have detrimental effects on one's credit scores, which can be especially difficult for somebody who has just recently fallen ill or been seriously injured. The proposed law would also mandate that medical debt be expunged from an individual's record within 45 days after payment or settlement of the amount owed.

This proposed legislation is important for many people who are struggling due to credit scores that have been damaged by medical bills. However, even if the proposed bill does become law, some consumers in Texas and elsewhere will still find themselves facing overwhelming debt. Consumers in this type of situation may want to consider filing for bankruptcy in order to begin a new chapter in their financial lives.

Source: The Southern Illinoisan, "Durbin: Bill would ease medical debt's effect on credit score," Jan. 29, 2013

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