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Consumer Advisory: 7 ways to keep medical debt in check

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Debt collection is the top complaint we’ve received since September 2013. Out of all debt types, medical collections make up 52 percent of collection accounts on credit reports, far outpacing all other types of debt.

Medical collections are so widespread, that an estimated 43 million consumers with an account in collection have medical debt. We analyzed medical collections in our latest report, to explain why medical debt is affecting so many more credit reports than any other type of debt. You can read more about how medical debt hurts your credit report.

Here are steps you can take to keep medical debt in check:

1. Review medical bills carefully

If you don’t recognize the provider, check the date of service to see if you had a medical treatment on that day. For more complicated procedures, ask for an itemized bill from the provider in order to check how much you were charged for each service. Some providers who bill you directly may have been associated with a hospital where you were treated, so you may not have known you were receiving services from them at the time you were being treated.

2. Get documentation

Prepare an organized record of all bills. If you need to dispute a bill, send a written notice to the provider and include a copy of all relevant documents, such as records from doctors’ offices or credit card statements. Do not send original documents.

3. Check your health insurance policy and make sure your provider has your correct insurance info

You should know what your insurance covers, and what it doesn’t – but first your insurance information needs to be up-to-date and accurate! A small mix up can lead to big bills for expenses that your insurance should have covered.

4. Act quickly to resolve or dispute the medical bills that you receive

If you have verified you owe the bill, try to resolve it right away. Verify whether an insurer is paying for all or part of a bill. If you delay the bill and let it end up in collections, it can have a significant impact on your credit score. If you don’t owe the bill, act quickly to dispute it.

5. Negotiate your bill

Hospitals may negotiate the amount of the bill with you. The tab may be reduced if you pay the whole amount up front. You can also try asking for the rate that people who have insurance get. The hospital might also offer a plan that enables you to pay off the debt in installments at no interest. It doesn’t hurt to ask.

6. Get financial assistance or support

Many hospitals have financial assistance programs, which may be called “charity care,” if you are unable to pay your bill. Check the deadlines, which can vary.

7. Don’t put medical bills on your credit card, if you can’t pay it

If you can’t immediately pay off a high debt on your credit card bill, you will be charged high interest, and it will look like regular debt to other creditors. Instead, ask your medical provider for a payment plan with little or no interest.

Related information about debt collection

Check out Ask CFPB to learn more about your debt collection rights and to learn about medical credit cards.

If you’re dealing with debt in general, you can consider finding a reputable credit counseling agency.

Prepaid products: New disclosures to help you compare options

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Last March, we asked you to comment on possible prepaid card disclosures. Thanks to your feedback and additional consumer testing, today we’re proposing new disclosure requirements that consumers would receive before deciding to open a prepaid account.

These new disclosure requirements are part of our larger prepaid accounts proposal to extend many federal consumer protections to prepaid products.

Currently, each prepaid card company’s retail package discloses different information in different ways. This can be confusing if you’re trying to compare costs between prepaid accounts. Below are a couple examples of the disclosures on the packaging of major prepaid cards we found in stores near our Washington headquarters in March:

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As you can see, each prepaid card varies in style, format, and content. Website disclosures have similar problems. As a result, it’s challenging for consumers to make sense of each product’s cost.

Proposed disclosures

We’re proposing to standardize these disclosures with a new requirement: that prepaid companies adopt model disclosure forms so that consumers can make better choices between prepaid options.

The disclosures would take two forms: (1) a short form that would highlight key information about the account’s fees and (2) a long form that would list all of the account’s fees.

Below is an example of the proposed short form disclosure that you would see in a retail store, which includes a link and a telephone number to access the long form disclosure on a smartphone or mobile device.

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The short form disclosure lists four types of fees in large and bold font, that we think are most important to many consumers: the monthly fee, ATM withdrawal fees, per purchase fees, and cash reload fees. The design makes it easier for consumers to identify the best prepaid account for their needs.

For consumers that aren’t shopping for a prepaid account at a retail store or by phone, we’re proposing that they receive the short and long form disclosure before getting the account.

Tell us what you think

Now, we want to hear from you! Take a look, and tell us if you think this model form does a better job of disclosing fee information compared to other forms you’ve seen on prepaid card packaging. We’re eager to get feedback from consumers, industry, advocacy organizations, and anyone else who is interested in making prepaid account disclosures better.
While you’re looking at the form, some questions to consider might be:

  • Does the short form disclosure above make it clear how much the account would cost you to use?
  • What would you like to see added or changed? Is there some way to make the information clearer?
  • Is there anything you find confusing?

We want to get your feedback so that we can consider it as we develop a final rule.

If you want to influence the design of a new prepaid card fee disclosure, let us know what you think. You can send us an email with your comments. We will update this post soon with a link to submit a formal comment on Regulations.gov.

To learn more, check out the preamble, the proposed rule, and the official interpretations.

Four things older Americans can do about debt collection problems

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If you’re an older American and you’re having trouble with debt collectors, you’re not alone. Since July 2013, older Americans have submitted approximately 8,700 complaints to us about debt collection.

We looked at these complaints and described the most common problems that consumers are experiencing in our snapshot of debt collection complaints submitted by older consumers.

People’s complaints often express grief, confusion, and frustration regarding the collection of medical debt, debt of deceased family members, and even suspicious calls from individuals who claim to be collectors.

Here’s what you or your loved ones can do when experiencing debt collection problems:

1. Get more information if you don’t recognize the debt

Older consumers report that debt collectors may have inaccurate or inadequate information, and sometimes don’t provide sufficient information to help them identify the debt. Almost one-third of the older consumers who submitted a complaint couldn’t identify the debt being collected.

First things first! Ask the debt collector for the company’s name and address. If the debt collector refuses to give you this information, you may be dealing with a fraud. If you think that a caller may be a fake debt collector:

Ask the caller for his or her name, company, street address, telephone number, and professional license number.

If you have the company’s name and address but you don’t recognize the debt, ask for more information in writing. You can start by using this sample letter.

Send this letter as soon as you can — if at all possible, within 30 days of when a debt collector contacts you the first time about a debt.

2. Dispute the debt if it’s not yours or if the amount is wrong

You can write a letter disputing the debt or any portion of the debt. It’s important to do so as soon as possible after you’re first contacted, and to keep copies of any letters you send.

If you dispute a debt (or part of a debt) in writing within 30 days of when you receive the required information from the debt collector, the debt collector cannot call or contact you until after the debt collector has obtained verification of the debt and has provided the verification of the debt in writing to you. You can use this sample letter.

3. Stop harassing and/or offensive calls

Older consumers told us that debt collectors sometimes refuse to take “No” for an answer, reporting in their complaints that collectors often use offensive language and make threats. To one extreme, we’ve also heard about collectors making successive calls using profanity or derogatory names.

You don’t have to put up with it. You can send a letter to the debt collector telling it to stop contacting you. If you dispute the amount due, or you don’t believe that it’s your debt, put that in the letter, too. You can use this sample letter.

Telling a debt collector to stop contacting you does not stop the collection, including the filing of a lawsuit against you or reporting negative information to a credit reporting company.

4. Know your rights: Your federal benefits have many protections from garnishment in collection

Many older consumers rely on Social Security or other federal benefits and frequently complained that debt collectors threatened them with garnishment of these benefits. Most federal benefits, such as Social Security, Veterans’ (VA) benefits, and Supplemental Security Income (SSI) benefits, are protected in debt collection. There are exceptions for, among other things, money owed in child support, spousal support, federal student loans, or for federal taxes.

When you receive federal benefits by direct deposit to your checking account, your bank or credit union is required automatically to protect up to two months of these benefits that are directly deposited into your account. If you receive your benefits on a government issued prepaid card, they usually are protected too. Some exceptions may exist for debts owed to a federal or state agency.

If you’re not sure if your federal benefits are being wrongfully garnished, you should seek legal advice.

Here’s how you can find a lawyer:

Learn more about your rights when it comes to debt collection.

You can also:

  • Submit a debt collection complaint online or by calling (855) 411-2372. We’ll forward your issue to the company and work to get you a response, give you a tracking number, and keep you updated on the status of your complaint.
  • Tell us your story, good or bad, about your experience with consumer financial products. We hear from many Americans every day and we’d like to hear your story.

Struggling private student loan borrowers are still searching for help

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In the years leading up to the financial crisis, many of the same subprime lending practices that led to troubles in the mortgage market also existed in the private student loan market. Like the homeowners who turned to their mortgage servicer to modify their loans but ran into customer service dead ends, lost paperwork and other breakdowns, many private student loan borrowers are looking for a clear path to stay current and avoid default.

Today we’re releasing a new report summarizing complaints from private student loan borrowers about difficulties faced when working with a lender or servicer to avoid default.

While federal student loans have a number of loan modification options to help borrowers avoid default, private student loan servicers and lenders may not make it easy for borrowers to get help in times of distress, which may have consequences for not only your financial future, but also for the broader economy.

For example, our analysis of complaints reveals that many of you tried to find out more information by calling your lender or servicer, but received conflicting or inaccurate information as you were bounced between call center staff. Many of you told us how you were provided no option at all, driving you into default, even though a reduced payment plan might be in the best interest of both you and your lender.

Request for repayment options

After listening to you and to the student loan industry, we’ve developed some advice for borrowers who want accurate information on alternative repayment plans and loan modification options, including a set of instructions that you can consider sending to your private student loan servicer (the company that sends a bill each month).

You can download the sample letter and mail it to your lender or servicer, or you can use the text below to provide instructions using the “Send a Message” or “Contact Us” feature when you log into your account on the servicer’s website.

Although some companies are willing to help borrowers during a time of financial distress, unfortunately, not all private student loan companies offer assistance when consumers are struggling to repay their loans. Using this letter may help you get a clear answer and avoid long hold times and transfers from one call center representative to another.

I am writing to you because I need to reduce my monthly private student loan payment due to a financial hardship. I am requesting a payment that allows me to meet my other necessary living expenses.

Please conduct a review of my account to determine whether I am eligible for an alternative repayment plan.

[This paragraph is optional] I believe I can afford to pay $____ per month toward my loan(s). If you require details on my monthly income and expenses, I have attached a worksheet which you can use to make an evaluation.

If you require additional authorization in order to reduce the amount of my monthly payment, please consider this letter a written request that you contact my lender or other authorized party to conduct a review of my account and provide a response within 15 days of receipt of this letter.

If you do not grant this request for a reduced payment plan, I will be at risk of default. If I receive a reduced payment plan, I may be able to avoid default, which is in the best interest of all parties.

If you determine that you are unwilling to provide a reduced payment plan, please provide the following information:

  • What available reduced payment options do you offer other than forbearance?
  • For what reason(s) am I ineligible for these repayment programs?
  • If I am not eligible for these repayment programs, when will I become eligible?
  • What steps do I need to take to qualify for these repayment programs?
  • Do you anticipate modifying these repayment programs in the future?
  • Where on your website can I find additional information on these alternative repayment programs?

In addition, if you are unable to provide any of the information or documentation I have requested or otherwise cannot comply with this request, please provide an explanation.

I hope we will be able to agree upon an acceptable repayment plan.

Thank you for your cooperation.

These instructions may help you get valuable information on repayment options to reduce your monthly payment or to temporarily postpone making payments. You can also download a sample financial worksheet that you can use to determine the maximum amount of money you can put toward student loans.

Some student loan companies have told us that they may ask for recent pay stubs or a bank statement to verify income and expenses. Consider including these documents with your request, which you can mail or send through your private student loan servicer’s website after you login.

We also have other sample letters you can send to your student loan servicer to give payment instructions or request that your co-signer be released and others you can send to a student loan debt collector.

If you’re experiencing a problem with a student loan or debt collection, you can submit a complaint online or call us at (855) 411-2372.

If you have questions about repaying student loans, check out our Repay Student Debt tool to find out how you can tackle your student loan debt.

Rohit Chopra is the CFPB’s Student Loan Ombudsman. To learn more about our work for students and young Americans, visit consumerfinance.gov/students.

Special notice for Corinthian students

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Today, we announced a lawsuit against for-profit college chain Corinthian Colleges, Inc. We allege that the company lured in tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Our lawsuit also alleges that Corinthian used illegal debt collection tactics to strong-arm students into paying back those loans while still in school.

Corinthian Colleges, Inc. is one of the largest for-profit college companies in the United States, operating more than 100 school campuses under the names Everest, Heald, and WyoTech.

Today, we’re also publishing a special notice for current and former Corinthian students to help you navigate your options in this time of uncertainty, including information on loan discharge options.

If you experience difficulty with your student loan you can submit a complaint online or by calling (855) 411-2372. You can also find more information about options for repaying your student loan on our website.

Reminder for steps you can take if you think your credit or debit card data was hacked

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Yesterday, Home Depot confirmed that there has been a breach of its payment data systems. According to the company, the breach could potentially impact any customer that has used their card for payment at a Home Depot in the U.S. or Canada since April 2014.

Here’s what you can do to protect yourself if you spot unauthorized charges.
Protect your credit and debit card information
If your information was part of a breach, the most immediate risk is that the thieves may make unauthorized charges or debits to your accounts. Keep a close eye on your account activity and report suspicious transactions immediately to your bank or credit card provider. The sooner you tell your provider about any unauthorized debits or charges, the better off you will be.

1. Check your accounts for unauthorized charges or debits and continue monitoring your accounts

If you have online or mobile access to your accounts, check your transactions as frequently as possible. If you receive paper statements, be sure to open them and review them closely. If your provider offers it, consider signing up for email or text alerts.

Report even small problems right away. Sometimes thieves will process a small debit or charge against your account and return to take more from your bank account or add more charges to your credit card if the first smaller debit or charge goes through. And keep paying attention: fraudulent charges to your card or fraudulent debits to your bank account might occur many months after the theft of your information during a data breach.

2. Report a suspicious charge or debit immediately

Contact your bank or card provider immediately if you suspect an unauthorized debit or charge. If a thief charges items to your account, you should cancel the card and have it replaced before more transactions come through. Even if you’re not sure that PIN information was taken, consider changing your PIN just to be on the safe side.

If your physical credit card has not been lost or stolen, you are not responsible for unauthorized charges. You can protect yourself from being liable for unauthorized debit card charges by reporting those charges immediately after you find out about them or they show up on your bank statement.

If you spot a fraudulent transaction, immediately call the card provider’s toll-free customer service number on the back of your card. If the provider asks, follow up with a written letter. The provider should give you the address where you need to send the letter. Make sure to send it as soon as possible after you tell the provider about the unauthorized charge.

When you communicate in writing, be sure to keep a copy for your records. Write down the dates you make follow-up calls and keep this information together in a file.

If your card or PIN was lost or stolen, different rules may apply. Your timeline for reporting after your card, PIN, or other access device is lost or stolen is tied to when you discover the loss or theft or when unauthorized transactions show up on your bank statement. Therefore, you should make the report as soon as you know that there is a problem.

Debit card issuers should investigate the charges (generally within 10 business days) and take action quickly (generally within 3 business days). For your credit card, it can take longer, but you don’t have to pay the charge while it is under investigation. You also have a right to see the results of their investigations.

3. You can submit a complaint to the CFPB if you have an issue with your bank account or credit card

If you have an issue with your bank account or credit card, you can submit a complaint online or by calling (855) 411-CFPB (2372), TTY/TDD (855) 729-CFPB (2372).We’ll forward your complaint to the company and work to get you a response.

If you have other questions about billing disputes and your debit and credit card protections, you can Ask CFPB.

4. Know when to ignore anyone contacting you to “verify” your account information by phone or email

This could be a common scam, often referred to as “phishing,” to steal your account information.

Banks and credit unions never ask for account information through phone or email that they initiate. If you receive this type of contact, you should immediately call your card provider (using a customer service number that you get from a different source than the initial call or email) and report it. Reliable sources of contact information for your card provider include the customer service number or web address listed on your bank or credit card statement or the back of your card.

For more information on phishing scams, check out the FTC’s consumer alerts.

For more information, check out the consumer advisory.