Four U.S. Senators are asking the CFPB to address the impact of medical debt reporting practices on consumers’ ability to obtain credit. Senators Jeff Markley, Robert Menendez, Chuck Schumer and Sherrod Brown (the “Senators”) expressed the need to change medical debt reporting practices in a letter sent to CFPB director Richard Cordray on August 9, 2012.

The Senators argued that current medical debt reporting practices “can translate into large and unforeseen costs for consumers.” Additionally, while other forms of consumer debt are premised on a consumer’s ability to pay, the same is untrue for medical debt. Due to the interplay between insurance coverage and health providers’ billing practices, consumers’ medical bills can be sent to collections before consumers know they owe a debt. As a result, the Senators argue that “medical debts are less accurate predictors of a consumer’s creditworthiness than other debts making their presence on the credit report unfair to consumers and unhelpful to lenders.”

As a solution to the problems associated with medical debt reporting, the Senators proposed the Medical Debt Responsibility Act: an amendment to the Fair Credit Reporting Act which would require consumer reporting agencies to remove medical debts from a consumer’s report within 45 days after the debt has been paid or settled. The Medical Debt Responsibility Act has passed the House of Representatives, and has the support of the American Medical Association, the Mortgage Bankers Association and the National Credit Reporting Agency.