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Friday, December 12, 2014

Consumer agency: Medical debt a surprise scourge for 43 million in US

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Nearly 20 percent of U.S. consumers with credit records — 42.9 million people — have unpaid medical debts, according to a report published Thursday by the Consumer Financial Protection Bureau (CFPB).
The findings suggest that many Americans are being trapped by debt because they are confused by the notices they get from hospitals and insurance companies about the cost of treatment, the CFPB report said. As a result, millions of Americans may be surprised to find they are stuck with lower credit scores, making it harder for them to borrow the finances needed to buy a home or an automobile.
"When people fall ill and end up at the hospital with unexpected bills, far too often they have entered into a financial maze," CFPB director Richard Cordray said, according to the prepared text of a speech set to be delivered Thursday in Oklahoma City.
On average, a person with only overdue medical debt owes $1,766, the CFPB report said. It added that someone with unpaid medical bills and other sources of debt — possibly credit cards or back taxes — owes an average of $5,638. More than half of all debt on credit reports stems from medical expenses, according to the CFPB.
Cordray said collection agencies sometimes don’t inform debtors of their obligations in a timely manner — and when the debtors seek credit and learn of a problem with their score, they scramble to pay up and are...
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