Getting calls and letters from debt collectors can be overwhelming, especially if you’re dealing with a medical bill that could bankrupt you. Whether the debt is big or small, dealing with collections is stressful - especially if you are unsure what you are being billed for.
The stats are sobering. Over 1 in 5 people in the U.S. are dealing with medical debt. As of April 2024, the Consumer Financial Protection Bureau (CFPB) reported 15 million Americans have medical debt on their credit reports.
The good news is you have more leeway with medical debt than you once did, but it’s never a good idea to let those bills languish.
How medical bills impact your credit
Rules have been implemented to protect consumers’ credit from outstanding medical debt - and the Biden administration is still pushing for new federal rules to completely remove medical debt from credit reports. While all this is shaking out, here’s where we currently stand:
Collection agencies may or may not report debt to credit bureaus, but there's no rule that says they must delay reporting.
Now you have more time to resolve medical debt. In 2023, three major credit reporting agencies (Equifax, Experian, and TransUnion) implemented a rule to give consumers a 1-year grace period before medical debts in collections appear on their credit report. A six-month window may apply in other types of debts, but for medical bills, the 1-year delay is a recent change aimed at giving people time to resolve issues with insurance or payments before it affects their credit score.
Avoid paying medical debt with your credit card. If you don't have the cash, don’t reach for your credit card. Once you transfer debt to your card, the protections you and your credit score have against medical debt no longer applies. You are responsible for credit card debt regardless what you used it for, and your credit score will suffer if you can't pay it off.
Bottom Line: You can remove medical collections from your credit report if they are paid, the total is under $500, or if the collection is inaccurate. You also have a year to do this before they show up on your credit report.
What can you do to minimize the harassment from debt collectors? There are several steps you should take quickly to help minimize what you owe.
Action checklist:
Verify Your Debt
The Fair Debt Collection Practices Act (FDCPA) states that collectors must validate your debt within 5 days of contacting you. This means they should provide the following details:
The amount owed.
The name of the creditor (hospital or provider).
A statement about disputing the debt within 30 days.
If the consumer disputes the debt in writing within 30 days, the debt collector must verify the debt or provide a copy of a judgment and mail it to the consumer.
Upon written request, the collector must also provide the name and address of the original creditor if different.
If they haven’t sent this information, request it. Once you have it, dispute any erroneous debt in writing via certified mail. This forces the collector to stop collection activities until the debt is verified.
Request Written Contact Only
You have the right to request how you wish to be contacted. Asking for written contact only can reduce stress and create a paper trail. Send a certified letter requesting no phone calls and that all communication be through mail.
Check with Your Insurance
Sometimes hospitals send bills to collections before they finish insurance paperwork. Contact your insurance company to confirm if they’ve already covered the procedure. If there’s a discrepancy between what the hospital and insurance say you owe, have your insurance company help resolve the issue.
Negotiate with the Hospital
If insurance won’t cover the remaining balance, you can often negotiate with the hospital or provider —even though the bill is in collections. Offer to settle for a reasonable amount that you can afford. The minimum you want to negotiate with the hospital is 35-40% off. Most hospitals will give you that much as "cash discount". If you need a payment plan, around 60% is usually the offered rate. Be persistent and document all interactions.
Negotiate with the Collection Agency
If hospital negotiations fail, try negotiating with the collection agency. They may accept a reduced payment (often 20-30% off) just for settling upfront. Written offers may work better than phone negotiations.
Hire a Medical Bill Advocate
A medical bill advocate can help verify debts, negotiate payments, or spot billing errors. Choose an advocate with expertise in negotiating, and be clear on how they’ll charge for their services (hourly, per case, or based on savings).
Consider a Consumer Protection Attorney
If all the above negotiations stall or a lien or judgment has been filed, consult a Consumer Protection Attorney. They can advise you on your rights, ensure debt collectors are following the law, and represent you in court if necessary.
The biggest takeaway is to remember as with any debt, make sure what you are being presented with is accurate. And communicate! 60% of medical consumers do not question, appeal, or negotiate their accounts. On average, if you do, 50% of the time you will be successful. That adds up to a great deal of money, and peace of mind.
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