How Long Does a Medical Bill Stay in Collections?
Understand the lifespan of medical bills in collections, their impact on your credit, and effective strategies to manage this debt.
Medical bills can become a source of considerable stress, particularly when they transition from a healthcare provider to a collection agency. Understanding the various timeframes associated with medical debt, from its appearance on credit reports to the legal limits on collection efforts, can help individuals navigate these challenging circumstances.
Medical Bill Impact on Your Credit History
Medical collection accounts can appear on consumer credit reports. Generally, such accounts remain on a credit report for up to seven years from the date of the original delinquency. This period begins when the bill first became overdue, not when it was transferred to a collection agency. Most healthcare providers do not report directly to credit bureaus; instead, an unpaid medical bill must first be sent to a collection agency before it can appear on a credit report.
Recent changes have altered how medical collections are handled by credit bureaus. As of July 2022, paid medical collection debt is no longer included on consumer credit reports. Once a medical collection is paid, it should be removed, which differs from other types of debt that might remain on a report even after payment. Additionally, there is a 365-day waiting period before unpaid medical collection debt can appear on a credit report, providing a grace period for consumers to resolve bills.
Since April 2023, medical collection accounts with an initial balance under $500 are no longer included on consumer credit reports. These changes aim to mitigate the negative impact of medical debt on credit scores, recognizing the unique nature of these obligations. Medical debt in collections is also no longer used in the calculation of VantageScore credit models.
Understanding Collection Time Limits
Beyond credit reporting, there are legal timeframes, known as statutes of limitations, within which a collection agency can pursue legal action, such as filing a lawsuit, to collect a medical debt. These statutes are distinct from the period a debt remains on a credit report and vary significantly by state. The general range for these time limits falls between three and ten years, depending on state law and the type of agreement involved, such as written or oral contracts.
Certain actions can “restart the clock” on these legal time limits, extending the period during which a collector can sue. Making a partial payment on the debt or acknowledging the debt in writing can reset the statute of limitations in many states. This means that even if a debt is nearing its time limit, an unintentional action could renew a collector’s ability to take legal action. Even if a debt is beyond its legal collection period, it may still appear on a credit report for the standard seven-year duration.
Collection agencies are still legally permitted to contact individuals about time-barred debts, even if they can no longer sue. They are prohibited from threatening legal action if the statute of limitations has expired. The Fair Debt Collection Practices Act (FDCPA) governs these practices, ensuring that collectors do not use abusive, unfair, or deceptive means to collect debts. Consumers should be aware of their rights regarding such communications.
Taking Action on Medical Bills in Collections
When a medical bill goes to collections, verifying the debt’s accuracy is a primary step, as billing errors are common in healthcare. Consumers have a right under the Fair Debt Collection Practices Act (FDCPA) to request validation of the debt from the collection agency. This request should be made in writing, ideally within 30 days of receiving the initial collection notice, and should ask for documentation proving the debt’s legitimacy, such as the original bill and a breakdown of charges.
Communication with collection agencies should primarily be in writing to create a clear record of all interactions. If communication becomes harassing or inappropriate, individuals can send a written cease and desist letter to stop further contact, though this does not eliminate the debt itself. Negotiating a settlement for a lower amount or setting up a manageable payment plan are options, especially if the debt is valid and affordable. Any agreed-upon settlement should be documented in writing before any payment is made.
The FDCPA prohibits debt collectors from engaging in deceptive, unfair, or abusive practices, such as making false statements or threatening arrest. If inaccurate information appears on a credit report, individuals can dispute it directly with the collection agency and the credit bureaus. The Fair Credit Reporting Act (FCRA) requires credit reporting agencies to investigate disputes, typically within 30 days, and remove any unverifiable or incorrect entries.
For complex or persistent issues, seeking professional help can be beneficial. Financial counselors can provide guidance on managing debt and negotiating with collectors. If consumer rights may have been violated or legal action is threatened, consulting with a legal aid service or a consumer rights attorney is advisable. These professionals can help navigate debt collection laws and protect an individual’s interests.