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Proposed legislation protects people with medical debt from abuse

A catastrophic illness or a life threatening injury can leave a person overwhelmed by medical debt. As people adjust to changes in their health insurance coverages under the nation's new health care law, a physician whose bill was paid in the past might now be an out-of-network provider subject to a very large and expensive deductible.

Proposed federal legislation would protect consumers from the financial challenges associated with out of control debt. One of the sponsors of the legislation, a congressman from Kentucky, suggested that the law would offer protection from debt collectors and damage to an individual’s credit. The law would require removal of paid debts from a person’s credit report within 45 days of its payment.

Under current law, Jefferson County residents in a dispute with a health insurance company over payment of a medical expense could be hurt by a negative report on their credit. This negative notation could remain on the credit report long after the disputed debt has been resolved and paid. The new law would expedite removal such negative information.

The legislation is only at the proposal stage and passage could be a long way off. In the meantime, consumers struggling to eliminate debt might benefit from a repayment plan that could grant them the debt relief they are looking for through a Chapter 13 bankruptcy.

Because it is under the supervision of the court, a bankruptcy could stop creditor harassment, prevent foreclosure and stop wage garnishment while a person makes payments according to the court-approved consumer bankruptcy plan. A Louisville bankruptcy attorney is a good source for legal advice and guidance on the options available for debt relief.

Source: DailyFinance, “Medical Bills? Tips to Protect Yourself Until Laws Improve,” Karla Bowsher, June 25, 2015

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