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Medical balance billing may be damaging your credit


Medical debt is damaging the credit of right around 30 million people, according to the latest figures I've seen. What floors me about this problem is how it's both completely stealth and something that's so easily fixed once you know about it.

You would expect that damaged credit because of medical debt would be a problem for the uninsured. But the untold story here is that people with insurance get their credit trashed because of balance billing mix-ups.

Here's the scenario: You give your insurance card over, you get seen by the doctor and then you get a bill in the mail for the portion that insurance didn't pay. So you pay it and it's done, right? Well, not exactly. You pay it and you think you're done.

But because medical back-office billing is often the most chaotic part of any doctor's practice, something can easily go wrong.  You wouldn't know until you try to get a mortgage or a car loan and you're being sucker-punched by small piddling bills that you were never informed about damaging your credit.

Right now, the myFICO people who crunch your credit score make no distinction at all between little balance bill things and a huge unpaid debt on your credit report.

Last year, The Washington Post  reported several members of Congress introduced legislation called the Medical Debt Responsibility Act to require that these little dippy medical items be stricken from your report once paid, instead of sitting there for seven years. The bill passed the House by a big majority in 2010 and then just sat there on the shelf.

Now The New York Times reports this bill back in the Senate and hopefully coming alive. The Mortgage Bankers Association and the American Medical Association are just two examples of groups in favor of this bill because it's distorting the evaluation of credit when it comes to credit reports.

The funny thing is something like this should not require an act of Congress, but apparently it might. The people at myFICO warned against "subjective tinkering" of this sort in a recent blog post. And the credit bureaus themselves are fighting mad because they don't want this passed by the Congress.

Yet it is a serious problem. People get these deadbeat marks they should not have and don't deserve and the system right now offers no method of self correction.

This is one of the reasons I encourage you, six months before you buy a house, to pull all three of your files at AnnualCreditReport.com to look for weirdo stuff. Do something about it while you have time to make a difference, before you lose the house deal or the refi deal. Give yourself the luxury of time to solve problems.

Show Notes

Websites and resources mentioned May 24, 2012

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New York state attempts to ban free speech on the Internet

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A bill in New York state is seeking to ban free speech on the Internet unless you fully disclose your real identity, according to Wired.com.

The idea behind this bill is that you would not be able to legally post to a site based in New York, nor would you be able to post to other sites if you're a resident of the state, without full disclosure of who you are.

It's a bill that seeks to destroy any anonymity. But it's particularly insidious because here we have government trying to step in to restrict free speech. We've fought too many wars and lost too many brave men and women to just give up those Constitutional rights.

Meanwhile, The Orlando Sentinel  reports there's a lawsuit by a plastic surgeon against an unnamed individual who had breast enhancement that allegedly went wrong. This individual posted about her experience on a doctor review site.

The lawyer went to the cable operator and hit them with a court order to identify the mailing and billing address of the person who posted the comments. Now they're proceeding with what's called a 'slap lawsuit' in the lingo of the trade to intimidate people from speaking out.

The doctor's lawyer is saying that web comments made by the woman about alleged unevenness and extra scarring resulting from the surgery are defamatory because they're not true.

Whether you're picketing a business or posting a gripe online, you have to follow some basic guidelines anytime you air a grievance:

  • Stick strictly to factual info.
  • Never post, write or say anything about a person's character.
  • Don't let emotion rule your outbursts. Stick to the facts.
  • Anonymity is only there to a point, so don't reach too far. Again, stick to the facts!


What worldwide economic worries mean for your wallet

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CLARKONOMICS: Economic worries from around the world are causing mortgage rates to drop and having an impact on the price of gas.

The headlines in the financial press are ugly today. You have the Greece thing, of course. But there are also new concerns about Iran and their desire to incinerate the world. You see that all playing out in the volatility of the stock market and the temporary slowdown in what was the decreasing price of gas.

At the same time, unemployment is trending better. And interest rates are falling to unprecedented lows because investors have no place to go with their money. So they're pouring it into 'safe investments' giving you the spin-off benefit of lower interest rates.

Mortgage rates for 30-year fixed loans are at 3.78%. That's the fourth week in a row that the rate has gone down, with each week setting a new record low. Meanwhile, rates for 15-year loans are 3.04%. Both circumstances create incredible opportunity for would be investors, or if you're looking to refinance or looking to buy a home.

On the auto loan front, I'm seeing the cheapest rates of my entire lifetime. And I'm not talking about the zero percent interest or the 0.9% or 1.9% stuff from the auto makers. I mean what many of the credit unions are doing. Navy Fed, one credit union that I'm a member of, is doing car loans starting at 1.79% right now for people with top drawer credit.

Here's the reality: Times of uncertainty create opportunity. When others are afraid to tread, that's when the greatest long-term money is to be made. For example, those who bought real estate at the depth of the housing meltdown will ultimately end up with the greatest profits down the road.

Two ways to save money as you plan summer vacation

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Here we are on the eve of the unofficial kickoff of summer this Memorial Day weekend and I've got a couple of ways for you to save money on summer travel.

I've talked in the past about sites like VRBO.com, HomeAway.com and Airbnb.com as a way to get a deal if you're looking for a rental. With site likes these, you get to rent a private home or a room in a home directly from the owner rather than renting a hotel room. This can also be a great way to supplement your income when you're the owner of the property.

Now comes word that Airbnb.com is offering $1 million in insurance coverage if you make your home, vacation home or a single room available for rent to travelers. That should go a long way to addressing concerns about what happens if you rent your home and the renter damages it.

Meanwhile, the way people get to their vacation destinations is evolving. More than any time in the last 45 years, people are choosing the bus. Maybe they're fed up with security at the airports, the cost of airfare, or the hassle of driving their own vehicle. I don't know.

What I do know is that there are a variety of cheap bus lines including MegaBus, Bolt Bus and Greyhound Express that offer travel between metro areas. Services like these were originally designed to attract the young and broke, but they're now branching out and crossing economic and age lines. Women traveling alone are a particularly booming client base for some of these players.

MegaBus is now looking to expand its domestic routes by 50%, including moving into California and Texas.

With any of these services, there are no scary bus terminals because they pick up and drop off in metro areas where people feel safe. These are not the dirty, unreliable kind of buses you might remember from being a kid; free wifi and luxury seats are among the amenities most of them offer.

And, boy, are they cheap! My associate producer Joel, his wife and some friends are planning an upcoming trip from Atlanta to New Orleans. For a party of four travelers, they're paying $46 roundtrip for everyone on MegaBus!

Turn your gently used gadgets into cash

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Looking to unload your unloved gadgets at a profit? I've got some new websites to share with you.

The New York Times  reports there's a site called Priceonomics.com that offers price trends for a variety of different product categories. For electronics, you pop in what you've got (be specific) and it will tell you the value.

As an example, Priceonomics reports that a used iPhone 4S is going for an average of $500 in good condition. (Buying it new costs roughly $700).

The site even goes the additional step of averaging prices it finds on the web and suggesting that if you're trying to sell your used iPhone 4S, an acceptable price range would be anywhere from $388 to $612.

Other sites that cater to specific resale markets include the following. These can all potentially be great ways to turn unloved electronics into cash:

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