Pittsburgh councilman says benefits are endless after new rule bans medical debt on credit reports
PITTSBURGH (KDKA) — A Pittsburgh councilman said the benefits are limitless for people buried under medical debt after the Consumer Financial Protection Bureau announced new regulations to ban creditors from holding medical debt over peoples' heads.
"We're all in this together, and no one wants to hear the stories of their next-door neighbor who is going through cancer treatment and they can't afford that type of treatment," Pittsburgh City Councilman Bobby Wilson said.
KDKA Consumer Investigator Meghan Schiller talked to Councilman Wilson, who said the city is already working with a company to identify people facing terrible medical debt and working to use federal funds to get that forgiven. He spearheaded that program a few years ago and said this federal move is huge.
"It's great that it's hit such a national stage in terms of relieving medical debt and helping people who have medical debt because a lot of cities stood up in the past four years," Councilman Wilson said.
This move will remove medical debt from credit reports, estimated to raise credit scores by an average of 20 points.
Councilman Wilson said currently, Pittsburghers find themselves unable to get the most basic things like credit cards.
"To prevent someone from possibly being a first-time home buyer or even purchasing a car so they could seek further medical assistance. Even as simply as just providing even a credit card," he said.
The rule would erase an estimated $49 billion in unpaid medical bills from the credit reports of roughly 15 million Americans, the Consumer Financial Protection Bureau said.
KDKA Investigates talked one-on-one with Kiren Gopal, the CFPB's senior counsel.
"Credit reports are essentially an economic gatekeeper, and debt collectors understand that you really need a credit report that is clean in order to get a mortgage or a car loan or a small business loan. And so, they have you over a barrel. They exert a lot of pressure over you," said Gopal.
Gopal added that medical debt is a poor predictor of a person's ability to repay a loan, so it should no longer tarnish a person's credit record. The rule takes effect in March.
"We expect that consumers should see changes to their credit reports immediately thereafter. Consumer reporting agencies will be required under the law to comply," Gopal said.
In March, if consumers are still experiencing problems where medical debt is showing up on credit reports, consumers can file a complaint with the CFPB. However, the agency does not anticipate that happening on a wide scale.
