Debt-Collection Industry Opposes Removing Medical Debt from Credit Reports 

By Consumers for Quality Care, on November 6, 2024

Debt-Collection Industry Opposes Removing Medical Debt from Credit Reports 

As elected officials and regulators take action to drop medical debt from consumers’ credit reports, bankers and the debt-collection industry are lobbying to fight this initiative because it threatens their business, according to The Washington Post

Advocates say that wiping medical debt from credit reports would allow millions of consumers to qualify for loans, rent apartments, or obtain employment. Nonetheless, the debt-collection industry says that this sudden change could reward financial recklessness. They argue that patients will decide not to pay their debts unless they face consequences for refusing to do so. In addition, bankers say that they need a complete credit history to evaluate the creditworthiness of potential borrowers. Consumers who are unable to pay off their medical debts, they argue, may be less than ideal candidates for other lines of credit, such as a home or business loan.  

As the country’s medical-debt crisis has grown, so has the debt-collection industry. Private equity firms have invested heavily in this industry. Debt collectors use predatory practices, harassing consumers, sometimes going so far as to place liens against their home or garnish their wages. Credit scores also suffer, making it much harder for consumers to get out from under debt.   

Still, the root cause of medical debt lies within our health care system. Consumers face rising medical costs coupled with staggering out-of-pocket expenses. Often, these expenses must be paid before they can receive care. But nearly 40 percent of U.S. adults owe upwards of $220 billion in medical debt, and 15 million consumers have medical debt on their credit reports. 

Supporters of the plan to drop medical debt from consumers’ credit reports believe it will encourage patients to seek necessary medical treatment without any fear of crippling debt.  

Medical debt should not hamper consumers from living their lives. CQC applauds efforts that put consumers first and urges more collaboration between both public and private entities to address the burden of medical debt on millions of Americans.