By David Lazarus

The Consumer Financial Protection Bureau warned debt collectors and credit agencies last week that they need to step more carefully when it comes to trashing people’s credit scores because of stratospheric medical bills.

The agency’s notice underlines that the federal No Surprises Act took effect this month, protecting people from many unex- pected healthcare charges.

“Too many Americans have been shocked by surprise medical bills and forced to pay up through credit report coercion,” said CFPB Director Rohit Chopra.

What he means by “credit report coercion” is healthcare providers threatening to let debt collectors hold patients’ credit scores hostage unless they pay even the most wildly in- flated medical bill.

“Our action today should serve as a reminder not to collect on or furnish credit reporting information about invalid medical debt,” Chopra said.

This is an important safeguard. A 2019 study found that medical bills were a primary factor in about two-thirds of U.S. personal bankruptcy filings. More than half a million U.S. families go bankrupt annually because they can’t afford healthcare.
But the new law won’t help people already feeling the squeeze from unpaid medical bills.

People such as Mei Li. The Connecticut resident contacted me the other day seeking help with nearly $4,000 in charges for a pair of stitches.

Li, an animator and illustrator for children’s books, is uninsured. She told me she had to choose between health coverage and trying to build her own company.

While that’s not a choice anyone should have to make, 35-year-old Li gambled that because she’s relatively young and heal- thy, she could invest in her business rather than seek coverage through the Affordable Care Act.

She gambled wrong. In August, Li slipped and fell while out with her boyfriend. The cut on her chin wasn’t too serious, but it was clear she’d need stitches to close it.