Thursday, February 3, 2022

Biden just reduced 'financial distress' for veterans by allowing most of their medical debt to go unreported to credit bureaus


The Department of Veterans Affairs just established a new rule to prevent medical debt from weighing down veterans.

On Wednesday, the VA, along with the Consumer Financial Protection Bureau (CFPB), announced new minimum requirements for reporting debt to credit bureaus. Specifically, legislation signed in 2020 allowed the VA Secretary to establish a methodology for reporting debt to credit bureaus, and under the new rule, the VA will not report to those bureaus "until all available collection efforts are exhausted and the specified debt becomes classified as not collectible," according to a press release.

"Reporting debt to consumer reporting agencies impacts credit worthiness and negative reports may cause financial distress for Veterans," VA Secretary Denis McDonough said in a statement. "Late remittance or nonpayment can lead to debt collection. However, overpayment of benefits funds is often debt accrued through no fault of the Veteran."

According to the VA, if benefits are overpaid, it can result in a deduction of a veteran's monthly benefit until the debt is repaid. This can be caused by an error in paperwork on the veteran's end, along with processing errors on the agency's end.

"These new changes will result in a 99% reduction in unfavorable debt reported to consumer reporting agencies, thus reducing financial distress for Veterans," McDonough added.


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