Month: June 2023

Did you know that medical debts under $500 should not be on your credit report?

This agreement was made between the credit reporting agencies in April of 2023 and is reported and monitored by the Consumer Financial Protection Bureau (CFPB) . It does not mean that you will not get letters or communications about any such small debts, but it does mean these small medical debts will not be reflected by the big three reporting agencies (TransUnion, Equifax, Experian).

It is also unacceptable for a creditor to attempt to skirt this by aggregating unrelated debts to attempt to get over the threshold as it would be considered deceptive.

If you are facing this issue and need help, contact an attorney or local legal aid office (note: you do not need to have an attorney to fight these issues, you can do it on your own – articles like this are meant to help with just that). This is federal – not law, but an agreement between the three agencies nationwide, so it should be applicable in all states in the US, but you should consult an attorney for specific legal guidance for your situation.

From the CFPB:

The changes recently introduced by the nationwide credit reporting companies cover all medical bills reported to them by debt collectors, also known as medical collections. One of the first steps you can take is to check your credit reports for any outstanding medical bills. Currently, Equifax, Experian, and TransUnion are offering free online credit reports once a week through AnnualCreditReport.com.

• If you previously had a medical collection under $500, a paid medical collection, or a collection less than a year old on your credit report, check to make sure they no longer appear on your reports. Be aware, however, that this doesn’t include credit card collections, even if you used your credit card to pay for a medical expense under $500.
• Also, while you’re looking at your reports, check for any other information that might be inaccurate.
• If you find a medical collection under $500, a paid medical collection, a collection less than a year old, or errors on your report, you can dispute that information with the credit reporting company.

In addition, the nationwide credit reporting companies have announced that they’re extending the amount of time you have to dispute, negotiate, or pay for any outstanding bills before they can be reported. Previously, unpaid medical bills were generally furnished to credit reporting companies after 60 to 120 days, but the nationwide credit reporting companies are now waiting one year from the time you saw a doctor before they’re allowing medical debt to appear on your credit report. If you’re unable to pay your medical bills, you may qualify for financial assistance programs, often called “charity care.”

If you find invalid medical bills on your credit report or if you’re having issues disputing other medical bill errors with the credit reporting companies, submit a complaint to the CFPB.

The Fair Debt Collection Practices Act (FDCPA) is a federal law in the United States that provides consumers with certain protections against abusive and deceptive practices by debt collectors. Here are some of the basic consumer protections under the FDCPA:

1. Prohibition against harassment or abuse: Debt collectors are prohibited from engaging in practices that harass, oppress, or abuse consumers. This includes threats of violence, use of obscene or profane language, repeated phone calls intended to annoy, and publishing a consumer’s name on a “bad debt” list.
2. Limits on communication: Debt collectors cannot contact consumers at inconvenient times or places. They are generally prohibited from contacting consumers before 8 a.m. or after 9 p.m., unless the consumer agrees to it. They also cannot contact consumers at their workplace if they are informed that such calls are not permitted by the employer.
3. Right to validation of debt: Consumers have the right to request validation of a debt within 30 days of receiving a collection notice. Upon request, debt collectors must provide information such as the amount of the debt, the name of the original creditor, and verification of the debt.
4. Prohibition against false or misleading representations: Debt collectors are not allowed to use false, deceptive, or misleading representations to collect a debt. They cannot misrepresent the amount of the debt, the legal status of the debt, or their own identity or affiliation. They also cannot threaten legal action they do not intend to take or cannot legally take.
5. Cease and desist rights: Consumers have the right to request that a debt collector stop contacting them. If a consumer sends a written request to cease communication, the debt collector must stop contacting them, with a few exceptions such as providing notification of legal action.
6. Prohibition against unfair practices: The FDCPA prohibits debt collectors from engaging in unfair practices. This includes adding unauthorized charges or fees to the debt, depositing post-dated checks before the specified date, and attempting to collect a debt that is not owed.

It’s important to note that these are just a few examples of basic consumer protections provided by the FDCPA. The law is more comprehensive and provides additional safeguards for consumers, and there are other consumer protection laws that run concurrently and create even more robust protections. If you believe your rights have been violated under the FDCPA, you may want to consult with an attorney or report the violation to the Consumer Financial Protection Bureau (CFPB) or your state attorney general’s office.

South Carolina’s Attorney General is here: https://www.scag.gov/

South Carolina, under Title 40, requires all contractors to be licensed. This includes a builder of a new home – obviously! – but it carves out an exception if the owner of land wants to build her own home for her own use. We like this. Property rights and the ability to do what you want with your own property are a wonderful right.

However, the law states that any sale or offer for sale, or offer to rent the home out, within two years after completion or the issuance of the certificate of occupancy is prima facie evidence that this is not being done for the owner. This means that if it’s placed for sale or rent, the law assumes they were not doing it for their own use, and they have to prove otherwise, or they are in violation of Title 40. What does this mean?

For the seller/builder: multiple civil and criminal penalties. Additionally, the complete inability to place a lien on the home, such as a mechanics lien for failure to pay. Unlicensed contractors cannot sue for payment.

For the buyer: if aware, a number of potential issues:

• the buyer will have to list on their seller’s disclosures, if they ever sell, that the entire structure was done by unlicensed contractors, which will have a significant impact on the value of the home. Because this is a known but latent defect, the state requires it to be on the disclosures documents. Failure can result in civil and criminal penalties.
• the buyer should use this info to negotiate a lower price as it has a significant impact on the value.
• if anything goes wrong, there will be no warranty. Unlicensed contractors are operating illegally and cannot provide a warranty as such. The buyer will have no recourse against the seller, where usually there are several types of warranties and covenants – none of those will exist here for the buyer.
• the home will not qualify for FHA, VA, or potentially even conventional financing – the facts must be disclosed, and underwriters will not want this risk. It will be completely unacceptable for FHA and VA due to legal regulations; for conventional it will be a business risk decision (possible, but not probable to be accepted). Your buyer will likely have to be cash only.

In such a situation, the buyer is taking on all of the risk. Best practice is to demand the builder get an exception or rebut the presumption of the legal violations and get their waivers. The buyer can waive whatever the buyer chooses (subject to lenders’ requirements, if any), but should be aware of the risks, both legally and financially, before accepting such a situation.