intercst
4 Likes
I don’t have any medical debt, but how doesn’t it affect one’s finances? Pretending it doesn’t exist won’t change one’s ability, for example, to make car payments.
DB2
Removing medical debt from credit reports will make it even less likely that past due medical debt will be paid. In my former career I looked at many credit reports where the only missed payments or defaults were medical. This either caused the consumer to pay a higher rate for their loan or disqualified them from a purchase. This will no longer be the case.
Past due medical debt has been purchased by debt collectors between 1 and 10 percent of face value, that debt market will also be impacted, to soon to tell how much.
Jk
2 Likes
Of course it will! When people are broke they prioritize paying debts based on the severity of the consequences. For example, they do their utmost to pay their car loan because otherwise their car will be repo-ed pretty quickly. But they might delay paying their mortgage because it takes a long time for that to cause any consequences. Now, they have a big out regarding medical debt. They can choose to not pay it for a very long time (or ever, because those debts tend to get written off after a while) AND now it won’t even affect their ability to get new credit in the future!
I once wrote a post (or a comment) about car title loans (because someone I know rents an office location they own to a title loan place) and how they have a near zero default rate. The reason they have a near zero default rate is because if you have a car worth $10k and they give you a loan of $5k when you hand over the title, it would never ever make sense to default because they you are out a $10k car over a $5k loan! And you can’t easily get to work anymore. They say the few cases of default are usually due to imprisonment (where the person is stuck in prison and can’t pay) or death of the borrower.
5 Likes