What to Do If a Medical Bill Goes to Collections?
Navigate medical bills in collections with confidence. Get clear guidance to assess, address, and resolve debt while protecting your financial standing.
Receiving a medical bill in collections can cause significant stress. While the situation may seem overwhelming, individuals can take clear steps to address the debt. This article provides practical guidance for navigating medical bills in collections, offering a pathway toward resolution and managing potential impacts.
Reviewing Your Collection Notice
Upon receiving a collection notice for a medical bill, do not ignore it. Ignoring the notice can lead to complications, including legal action or negative credit reporting. The initial step involves thoroughly examining the collection notice itself.
The notice includes details for verification. Look for the original creditor’s name, the exact amount claimed, the date of service, the account number, and the collection agency’s contact information. Simultaneously, collect your own documents related to the medical service, such as original medical bills, Explanation of Benefits (EOBs) from your insurance company, and payment records. Cross-reference the collection agency’s information with your records to ensure accuracy and identify discrepancies.
Verifying or Disputing the Debt
After gathering all relevant documentation, formally verify the debt’s accuracy. Under federal consumer protection laws, you have the right to request debt verification within 30 days of receiving the initial collection notice. This request compels the collection agency to provide proof that the debt is valid.
Send a debt verification letter to the collection agency via certified mail with a return receipt requested. This provides a legal record that the agency received your request. The verification request should ask for details like the original creditor’s name, the precise amount owed, documentation proving the debt belongs to you, and the last payment date.
Upon receiving your verification request, the collection agency must cease all collection activities until they provide the requested information. If the verification reveals inaccuracies, or if you determine the debt is not yours or the amount is incorrect, send a formal dispute letter. This letter should clearly outline your reasons, referencing the discrepancies found. Keep copies of all correspondence.
Negotiating a Resolution
After verifying the debt’s accuracy, or if you choose to address it, negotiate with the collection agency. Conduct all communications in writing, or keep meticulous records of phone calls, including dates, times, and representatives’ names. This documentation provides a clear history of your interactions.
Several negotiation tactics can resolve medical debt. One common approach is offering a lump-sum settlement, proposing to pay a reduced amount immediately to satisfy the debt. Collection agencies are often willing to accept a lower amount to recover funds. Another option is a payment plan, breaking the total balance into manageable monthly payments. Many medical providers and collection agencies offer no- or low-interest payment plans.
A “pay-for-delete” agreement involves paying the debt in exchange for the collection agency removing the account from your credit report. While appealing, credit reporting agencies discourage this practice, and collection agencies are not legally obligated to agree. If pursuing this, always obtain the agreement in writing before making payment to ensure terms are honored. Regardless of the negotiation strategy, ensure all agreed-upon terms, especially settlement amounts or payment plans, are documented in writing before payment.
Managing Credit Impact and Consumer Rights
Medical collections can affect your credit report, though reporting rules have changed. Unpaid medical collections with an initial balance of $500 or higher can appear on credit reports, potentially impacting credit scores. Paid medical collections are no longer included, and a one-year waiting period exists before unpaid medical bills are reported, allowing time to resolve issues.
Regularly check your credit reports for accuracy. Obtain a free copy annually from Equifax, Experian, and TransUnion via annualcreditreport.com. If you find inaccuracies related to medical collections, you have the right to dispute them directly with the credit bureaus.
Consumers are protected by the Fair Debt Collection Practices Act (FDCPA), which applies to medical collections. This federal law prohibits debt collectors from engaging in abusive, unfair, or deceptive practices. Prohibited conduct includes contacting you at inconvenient times (before 8 a.m. or after 9 p.m. local time), harassing or intimidating you, or misrepresenting the amount owed. The FDCPA also requires debt collectors to have a reasonable basis for asserting the validity of the debts they collect. If you believe a debt collector has violated your rights, report the violation to regulatory bodies like the Consumer Financial Protection Bureau (CFPB).