Credit Report Abuse

Debt collectors’ “Rush to Judgment” to force consumers to pay and not dispute medical debts

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.