Arizonans with medical debt could soon see credit relief

PHOENIX — Thirteen hundred dollars. That's the median medical debt in collections in Arizona, according to the Urban Institute's latest data. "This can happen to anyone," Kaylan Fodor, political coordinator at Healthcare Rising Arizona, said.

"For us, it became really clear that medical debt shouldn't ruin lives. And unfortunately, that's what was happening in Arizona." But Arizonans carrying medical debt may see some relief.



Medical debt is now banned from consumer medical reports because of a new rule from the federal Consumer Financial Protection Bureau that was finalized this week. The change means that nearly 15 million Americans could see their credit scores improve by 20 points, which could lead to 22,000 additional affordable mortgages being approved across the country. "Hitting your credit is one of the ways that medical debt hurts people and to get it removed, I think, is really substantial, and it takes that burden off of the patient, it makes them have better access to credit," President and CEO of Undue Medical Debt Allison Sesso said.

"And frankly, it shouldn't have been there to begin with." Undue Medical Debt is a non-profit that buys up medical debt for pennies on the dollar and forgives it. Undue is now working with the state of Arizona to use $30 million in Rescue Plan Act funds to cancel medical debt.

"It's clear that whether or not you pay a medical debt is not a clear indication of whether or not you'll pay another debt," Sesso said. "It's because you didn't sign up intentionally to incur that debt like you would with other kinds of debt, so it's not a good indicator of creditworthiness, and I think that's understood by most Americans." Arizona also passed the Predatory Debt Collection Act back in 2022.

It cut interest rates on medical debt and protected assets from debt collectors. "That's been a really great solution for Arizonans facing medical debt, and I think that this move by the consumer financial protection bureau takes that a step farther," Fodor said. Both Fodor and Sesso agree this is a good first step, but more change is still needed.

"People end up with medical debt because the system is broken, not because of personal failings," Sesso said. Watch 12News+ for free You can now watch 12News content anytime, anywhere thanks to the 12News+ app! The free 12News+ app from 12News lets users stream live events — including daily newscasts like "Today in AZ" and "12 News" and our daily lifestyle program, "Arizona Midday"—on Roku and Amazon Fire TV . 12News+ showcases live video throughout the day for breaking news, local news, weather and even an occasional moment of Zen showcasing breathtaking sights from across Arizona.

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