How to Navigate Medical Bills at a Collection Agency

Dealing with Medical Bills that have been sent to a Collection Agency

Healthcare consumers are experiencing difficulty paying off their medical bills and the bills end up with a collection agency.  This is occurring more frequently due to the increase in deductibles and out of pocket expenses.

The survey results are alarming and could get worse due to shifting of healthcare expenses to the healthcare consumer.  If consumers do not pay their bills, they could end up sent to a collection agency.  Consumers are confused due to the complexity of the medical billing process.  So, what happens when your healthcare provider sends your bill to a collection agency?  The following will help you navigate the process.

When the Collection Agency receives the Bill

As a consumer, you have certain rights that protect you through the Fair Debt Collections Practices Act, a federal law. Medical bills are covered under the law.  The following are several rules a collection agency or debt collector must follow.  Failure to comply with rules gives you the option to file a complaint.

  1. Written Notice

Within five days of contacting you, the debt collector must send the consumer a written notice telling you the amount of the debt and the name of the company you owe the debt.  The notice must explain the dispute process if you believe you do not owe the bill.

  1. Disputed Debts

If the consumer disputes the debt, the debt collector must verify the debt in writing prior to restarting the collection process.  The consumer must receive answer to the dispute in writing.

  1. Written Notice for No Further Action

The debt collector must cease to contact the consumer if the consumer sends a letter requesting the debt collector to do so.

  1. Collection Calls

Collection calls cannot be made early in the morning or late at night…before 800am/after 900pm.  Calls at work are not allowed when the consumer makes it clear the employer disapproves.  Numerous calls per day are not allowed by the debt collector.

  1. Verbal Abuse or Threats

Neither are allowed.

  1. Relatives, Friend, Co-Workers or Neighbors

The debt collector can call the people above to find out your address, telephone number and where you work.  They cannot discuss your debt.

  1. Collecting More than the Consumer Owes

A debt collector cannot ask for more money from the consumer than they actually owe.

Paying a Medical Bill that is at a Collection Agency

A medical debt is just like any bill you receive with one exception; the consumer may not have planned for the expense, and it is stressful situation.   As mentioned earlier, one in five adults in the United States has medical debt. Also, medical debt is becoming one of the major factors that consumers file for bankruptcy.  The following will guide healthcare consumers through the payment process

  1. Medical Bills the Consumer Owes that are not at a Collection Agency

Preventing the medical bill from being sent to a collection agency is the first proactive step.  In the Consumer Navigator Section of this Web Site under the Healthcare Consumer Discounts Tab, we walk the consumer through how to deal with medical bills.  We encourage the consumer to review this guide. Again, be proactive!  The last thing a healthcare provider wants to do is sent the medical bill to a collection agency.  The healthcare provider must pay the collection agency a fee.  Remember, if a medical bill is assigned to a collection agency, the chances are very high you will not be welcomed back to that doctor or facility.

  1. Medical Bills at a Collection Agency

When the consumer starts to receive bills from a collection agency, the following steps should be followed.

  1. Make sure the medical bill is correct. If not, use the Written Notice or Dispute option in Section II above.
  2. As like medical bills that are not sent to a collection agency, they are negotiable.
  3. If you cannot pay the medical bill in full, ask for a payment plan. Most collection agencies will agree to this option, and they are usually interest free.
  4. If the consumer is having difficulty with the medical debt, it may be advisable to contact a professional settlement firm.
  5. If appropriate, secure a loan from the organization of the consumers choice.
  6. If appropriate, use saving accounts.
  7. If the consumer believes they cannot pay the medical bill, request a charity application. The consumer may qualify for a charity program offered by the healthcare provider.
  8. If the consumer believes they cannot pay the medical bill, request a Medicaid application. The consumer may qualify for a Federal or State program.
  9. Determine the statute of limitations for your state

    If a medical bill is in collections, take the time to learn about your legal rights. Specifically, determine the statute of limitations rules for your state.

    Essentially, the statute of limitation rules set a time limit on when the bill can be collected. If your debt has been unacknowledged for a certain period of time, then you might not be responsible for repaying it anymore.

    If the debt is within the time limit, then start your negotiations.

  10. Demonstrate hardship

    Demonstrating hardship is how to negotiate medical bills in collections. Financial hardship means that this medical bill, in combination with your other bills, is pushing you toward the brink of bankruptcy. If you filed for bankruptcy, a debt collector might get no payment at all.

    With that, many debt collectors are willing to work out a deal with borrowers that can clearly demonstrate financial hardship.

    You can show that this bill is causing hardship by providing proof of your current income and current bank statements. The numbers will clearly indicate if the monthly payments on this bill cannot be made.

3.  Medical Bills and Your Credit Report

Effective July 1, 2022: the three major U.S. credit reporting companies will stop counting paid medical debt on the reports that banks, potential landlords and others use to judge creditworthiness. The companies also will start giving people a year to resolve delinquent medical debt that has been sent to collections before reporting it — up from six months previously.

Next year, the companies also will stop counting unpaid medical debt under at least $500.

The companies say these moves will wipe out nearly 70% of the medical debt listed on consumer credit reports.

Patient advocates call that a huge advance. But they question whether medical debt should be on credit reports at all, given that many see it as a poor indicator of whether someone is trustworthy for a loan or rent.

Medical bills that have been sent to a collection agency will appear on your credit report.  Normally, it will take 30 days for the medical bill to appear on the consumers’ credit report.

Medical bills will affect your credit score negatively.  Medical debt is mostly uncontrollable.  This means, most companies granting credit look at medical debt differently because it is uncontrollable.  There are two credit score version currently in use; Version 8 and Version 9.  Most companies are using Version 8.  This means medical bills are weighted more heavier than they will be in Version 9.  Version 9 will not be a solution but will help level the playing field when medical debt is concerned.

Paying off your medical debt, when at a collection agency, will not change your credit score because it is still showing on the consumers credit report.  It will show paid, and the credit granter will take that into consideration.


Medical bills will become larger and more frequent in the future due to the shifting of healthcare cost to the healthcare consumer.  Healthcare consumers must become very proactive in managing and planning for medical debt.

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