"Good News" about Medical Debt

House Bill 2086, the Medical Debt Responsibility Act of 2011, has been proposed in this legislative session. The bill would provide an opportunity for consumers to either pay or settle debt related to medical expenses and to have credit reports reflect the positive outcome within a forty-five (45) day period. This would make the debts appear current and/or paid on a credit report, whereas in the past, medical debts have remained on a credit report just like other consumer debt, for a period of up to seven (7) years.

There are rampant errors in medical billing and collections, which is recognized across the industry and in the credit rating arena. These issues negatively affect consumer credit scores as well as the cost of obtaining credit. Additionally, until these issues are settled, which, in the case of an accident, for example, might be years, a consumer's credit rating might be devastated. This of course, limits economic growth when lending is curtailed or made more expensive for consumers due to old, mistaken or otherwise settled medical debt. Supporters of the bill cite that medical debt is not usually related to credit-worthiness, thus it should not negatively affect borrowing capacity.

Disclaimer: This blog is for informational purposes only and does not establish a client-attorney relationship. Consult with an attorney before taking action on any information found herein as individual circumstances may affect the applicability of information provided. Call The Law Office of Michael Riley at 508-405-0831 with any questions.

Coming This Summer: Consumer Financial Protection Bureau

The Federal Trade Commission is presently tasked with handling consumer complaints about debt collectors and their tactics. As of July 21, 2011, the Consumer Financial Protection Bureau will begin oversight of consumer concerns, including debt collection practices. Especially with more debt collectors tapping into new ways of contacting debtors, the past year witnessed an increase in complaints about creditor collection practices.

Debt collection companies are using cell phones numbers and sending emails. Of course, upon an application for credit, this information is typically collected. Since the consumer provides the information, the debt collectors/creditors feel it is "fair game" to use these methods to make contact with debtors. The new Consumer Financial Protection Bureau will have the ability to establish rules about debt collection that address these newer technologies and the extent to which collectors can go when attempting to collect a debt.

In general, there are protections already in place to keep creditors from harassing you. For example, if you write a letter to a creditor and request that they cease calling you, they must comply with your request. That protection is already in place under the Fair Debt Collection Practices Act (FDCPA). However, even with this recent legislation, complaints by consumers have risen almost twenty percent over 2010 figures. Thus, the newly created Consumer Financial Protection Bureau will likely develop more definitive rules and regulations about collection practices upon its opening in July.

Disclaimer: This blog is for informational purposes only and does not establish a client-attorney relationship. Consult with an attorney before taking action on any information found herein as individual circumstances may affect the applicability of information provided. Call The Law Office of Michael Riley at 508-405-0831 with any questions.

The Cost Burden of Home Ownership

The Joint Center for Housing Studies of Harvard University released a report of the state of home affordability. Households making between $45,000 and $60,000 suffered the greatest cost burden. Home values, especially in middle-class and minority neighborhoods, continue to fall with at least fifteen percent of properties that are worth less than the mortgages they secure. While the overall picture appears to be improving, with a two percentage point drop in delinquent loans in 2011, there are definitely pockets across the country that continue to fall into severe-cost burden as jobs in these communities are not recovering and incomes continue to decline.

Disclaimer: This blog is for informational purposes only and does not establish a client-attorney relationship. Consult with an attorney before taking action on any information found herein as individual circumstances may affect the applicability of information provided. Call The Law Office of Michael Riley at 508-405-0831 with any questions.

Greater Protections Against Foreclosure

On May 5, 2011, Representative Miller of North Carolina along with Mr. George Miller of California, Mr. Turner, Mr. Conyers and Mr. Al Green of Texas introduced a bill in the House of Representatives that serves to provide greater protection to citizens facing bankruptcy with regard to foreclosure on a home. The bill is intended to prevent foreclosure fraud. It will require mortgage servicers to remain current with homeowners insurance even if escrows are not available. The legislation will also provide for a clear path throughout the foreclosure process so that paperwork is handled by having adequate staffing in place in departments handling foreclosure and requiring an electronic record of each document received or issued throughout the process.

For instances when the mortgage is sold even while foreclosure or modification procedures are underway, the bill requires the new servicer assuming the loan to continue to move through the modification procedure or foreclosure at the same point at which it stood with the prior servicer. It also requires subsequent servicers to honor modification agreements created by the prior servicer.

When payments are received, subsequent requests for payment will be required to list all payments received and will detail how payments were applied, whether to fees, interest and/or principal due. If servicers change and payments are not credited, the new servicer is disallowed from marking the payment late or assessing late fees, which are merely the result of the transfer of the loan, as well.

Overall, this pending bill will require that the loan or mortgage servicer provides detailed paperwork and transaction information to consumers. It will provide for fair and transparent application of payments made and will protect homeowners from suffering the results of the sale of mortgages undergoing modification or foreclosure proceedings.

Disclaimer: This blog is for informational purposes only and does not establish a client-attorney relationship. Consult with an attorney before taking action on any information found herein as individual circumstances may affect the applicability of information provided. Call The Law Office of Michael Riley at 508-405-0831 with any questions.