Credit report abuse
Debt Collectors’ “Rush to Judgment” to Force Consumers to Pay and Not Dispute
A disturbing trend is developing in medical debt credit reporting. As most
consumers know, doctors’ offices generally will try to find insurance coverage for
medical bills before billing the patients directly. This only makes sense: the
insurance companies generally have the money to pay and most medical services
beyond simple procedures would bankrupt most consumers.
However, recently many doctors’ offices skip billing the consumer altogether if
insurance does not pay. The doctors send the bills directly to collection with debt
collectors. The debt collectors, eager to hold a knife to the consumers’ throats,
start the derogatory credit reporting even before they contact the consumers.
Is this illegal? It certainly implicates the federal Fair Debt Collection Practices
Act, which requires, among other things, that debt collectors never collect any
amounts other than what is legally owed. So, if the debt collector reports any false
or inflated amounts to the credit bureaus (such as, by adding interest or attorney’s
fees to the bill when these are not authorized by the agreement with the doctor),
this violates the law.
Debt collectors are obligated to send to the consumer notices of the amount of the
debt and the original creditor within five days after the debt collector first contacts
the consumer about the debt. These notices then trigger the 30-day period for
consumers to dispute the debt, and if a consumer disputes a debt, or any portion of
the debt, the debt collector must validate the debt (send the consumer
documentation establishing the debt) and may not collect on the debt before the
validation is sent to the consumer.
These requirements of federal Fair Debt Collection Practices Act raise the potential
of another violation where the debt collector has rushed to credit-report the debt:
must the debt collector cease credit reporting if the consumer disputes the debt or
any portion of the debt? I would argue yes: credit reporting these days is THE tool
of choice used by debt collectors to coerce consumers into paying debts they do
not owe or paying more than they owe. So, if you as a consumer have disputed the
debt, check your credit reports—if the debt collectors continue derogatory credit
reporting during the dispute period, this may well be a violation of federal Fair
Debt Collection Practices Act.