They can, but you have some protections that give you more time to settle the debt. The credit reporting agencies — TransUnion, Equifax, and Experian — must wait at least 12 months before adding medical debt to your credit report. This gives you some time to try to resolve the debt before it can hurt your credit score. Starting in January 2023, the credit bureaus will stop adding medical debt less than $500 to credit reports.
It’s important to address medical bills promptly and work with healthcare providers and collection agencies to find a resolution, such as setting up a payment plan or negotiating a settlement. Additionally, regularly monitoring your credit report and disputing any inaccuracies can help mitigate the negative effects of medical bills in collections on your credit.
The good news is that the credit bureaus no longer include paid medical debts on your credit report. Once you’ve paid the debt, it’s removed from your credit report.
What should I do if my medical bill goes to collections?
When a debt collector contacts you by mail, phone, or other method about an unpaid medical bill, they must also send a debt validation notice within about 5 days. This letter should include:
● The debt collector’s name and mailing information
● Name of creditor to whom the debt is owed
● Account number (if any) associated with the debt
● An itemized report of what you owe, including interest, fees, and payment activity
● Current amount of the debt
● Information about your debt collection rights as a consumer, including how to dispute the debt
- Review the Bill: First, carefully review the medical bill in question to ensure its accuracy. Sometimes, errors or discrepancies can occur, leading to incorrect charges. If you find any discrepancies, contact the healthcare provider or medical billing office to resolve them.
- Contact the Collection Agency: If the bill is accurate and has been sent to a collection agency, don’t ignore it. Contact the collection agency as soon as possible. You can find their contact information on the collection notice you received. Discuss the debt with them and confirm the details, such as the amount owed and payment options.
- Negotiate a Payment Plan: If you’re unable to pay the full amount upfront, try to negotiate a payment plan with the collection agency. Many agencies are willing to work with you to establish a reasonable payment schedule. Be honest about your financial situation and offer an amount you can realistically afford.
Once you’ve received this notice, you have 30 days to either dispute the debt or request more information. If you don’t respond, the collection agency can assume the debt is valid. If you dispute the debt in writing, the debt collector must stop efforts to collect until they provide you with verification of the debt.
If you expected your health insurance to pay part of the bill, check for errors and make sure your health plan has paid its share of the bill.
What options do I have if I cannot afford my medical debt in collections?
Regardless of how much you owe, if you can’t afford to pay medical debt in collections, here are some options:
● Negotiate your health debt. Some collection agencies will work with you on an income-driven repayment plan. Others will agree to settle the debt for less than the original amount. Get everything you agree to in writing.
● Write a medical hardship letter. You can request partial or full debt forgiveness from a collection agency. Explain why you cannot afford to pay. The agency may be willing to settle the debt for a smaller amount. They also may waive late fees or interest charges. Debt forgiveness, sometimes called debt cancellation, happens when the creditor no longer pursues collection of an unpaid debt. This typically doesn’t affect your credit score, but the forgiven amount could be reported to the IRS and can be taxed as income.
● Consider bankruptcy. As a last resort, you may consider filing bankruptcy to eliminate or reorganize your medical debt.
What is the statute of limitations on medical debt?
The statute of limitations is the time period during which a debt collector or creditor can file a lawsuit against you. The clock usually starts on the date of your most recent payment or when you miss a payment.
On most health debts, the statute of limitations is 3 to 6 years, depending on the state.
You will still be responsible for paying the debt after this period ends. Debt collectors can still contact you. However, if they try to sue you, they could be in violation of the FDCPA.
How can I get out of medical debt collections quickly?
Contacting the soon after receiving notice about the medical debt is the best way to quickly resolve the situation. If you wait too long to ask for a payment plan or a payoff amount, you could face a lawsuit — which will certainly prolong the process.
Resolving the health debt quickly also has benefits for your credit report and credit score, as we will discuss next.
How long does it take for a collection to fall off your credit report?
Most debts in collections will remain on your credit report for up to 7 years. But as of July 1, 2022, paid medical debts now are removed from your credit report. You also may be able to wipe medical debt from your credit report by negotiating its removal.
Can I get my medical bills forgiven?
Some medical providers will forgive or reduce your medical bills. You may need to prove financial hardship, such as a disability, that keeps you from working or limited household income. There also are some local, state, and federal financial assistance programs that could help. These options are best pursued, however, before your bill goes to collections.
The bottom line
If your medical debt goes to collections, it’s best to act fast. Paid medical debt now falls off credit reports instead of sticking around for 7 years like other debt.
You have several options for resolving heath debt in collections. You may be able to negotiate a payment plan with the collection agency to avoid further action, such as a lawsuit. You also could write a medical hardship letter and the agency may be willing to settle for a smaller amount or cancel the debt. As a last resort, you may opt for bankruptcy to eliminate or resolve the debt.
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