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Basic consumer protection may resolve medical debt issues

Some Arkansas consumers may not be aware of the basic consumer protections to which they are entitled. After an extensive study by the Consumer Financial Protection Bureau, a federal crackdown was launched that revealed several dubious procedures by medical debt collectors. A settlement was subsequently reached with Syndicated Office Systems, one of the biggest debt collection agencies in the country. As a result of its illegal practices, the company will now pay 23,000 consumers a total amount of $5.4 million.

The collection agent violated consumer rights under the Fair Debt Collection Act and the Fair Credit Reporting Act. Under these laws, consumers are entitled to request verification of owed amounts, and agents must provide a validation notice detailing the original statement and any accumulated charges and fees. Any collection activity must be suspended until the consumer is provided with this validation. Consumers who find errant delinquencies for medical bills on their credit reports may dispute those entries. The party that provided the incorrect information is obliged to investigate it, and if it is in error, it must be removed within 30 days; otherwise, it must be verified if it is accurate.

The Consumer Financial Protection Bureau found that the agency failed to provide validation notices to over 10,000 consumers. Those will now have to be identified, and any payments made by consumers will be refunded with the balances discharged. Any consumer who did not receive requested validation notices, and made no payments, will receive $100. The agency also failed to respond to disputes about credit report entries of 13,000 consumers within 30 days. It was reported that its response time exceeded one year in some cases, and those consumers will receive amounts related to the waiting period and the disputed amount.

Arkansas consumers who are overwhelmed by medical debt that is questionable may want to explore their rights to basic consumer protection. The services of a bankruptcy attorney who is experienced in protecting the rights of consumers may be helpful in achieving the appropriate remedies. The details of the debts will be examined and acted upon as necessary. In some circumstances, bankruptcy protection may be a valuable option to responsibly address financial obligations that have spiraled out of control.

Source: 13wmaz.com, "Medical debt collectors could now owe you", Kathy Kristof, June 22, 2015

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