5 Rights You Have Around Medical Debt Collection

According to an analysis of consumer credit reports from 2009 to 2020, roughly 1 in 6 people in the U.S. — an estimated 17.8% — have medical debt in collections.

Even with health insurance, medical bills can add up and go unpaid. In that case, the debt ends up on your credit report and could hurt your credit score. But there are actions you can take to avoid that happening.

What happens if you don’t pay a medical bill?

You are responsible for paying medical expenses as long as you’re billed for the right amount. If you don’t pay a medical bill on time, your healthcare provider may add late fees, interest, or other charges to the total. And, eventually, they could turn the bill over to a third-party debt collection agency to pursue payment.

According to the Consumer Financial Protection Bureau (CFPB), medical debt is the most common kind of debt on credit reports as of 2021. Last year, medical debt accounted for 58% of all third-party debt collection and added up to $88 billion on consumer credit reports. But the amount is probably higher, because not all debt in collections is reported to the credit bureaus. 

Most medical debt items on credit reports are under $500. But many people with medical debt owe multiple creditors. Many medical bills end up in collections because people aren’t aware they owe anything or because they expected their insurance to cover the cost.

What happens when medical bills are sent to a collections agency?

Once your medical bill is in collections, an agency will contact you to try to get payment. If you don’t pay, the collections agency could take legal action against you. For example, they could file a lawsuit to get your wages garnished or a lien placed on your home.

The debt collection agency must wait at least 12 months to report an unpaid medical bill to the major credit bureaus (TransUnion, Experian, and Equifax). This gives you time to verify, dispute, negotiate, or pay the debt before it can affect your credit score.

Once reported, unpaid medical debt can remain on your credit report for up to 7 years, just like any other type of debt. But, starting in January 2023, the credit bureaus will stop adding medical debt that’s less than $500 to credit reports.

Before July 1, 2022, even paid medical debt could appear on a credit report and ding a credit score for up to 7 years. But credit bureaus have now dropped paid medical debt from credit reports.

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Do I have consumer protections when someone is trying to collect a debt from me?

Yes, the Federal Trade Commission (FTC) and the CFPB enforce more than a dozen consumer financial protection laws nationwide. These include the:

• Fair Debt Collection Practices Act (FDCPA): This prohibits third-party debt collectors from using threats, harassment, deception, and coercion — or any other illegal or abusive tactics — to get you to pay. In addition to the federal law, most states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have specific consumer protection laws, some which mirror the FDCPA.

• Debt Collection Rule: Enacted in November 2021, this rule regulates the ways debt collectors can contact you and what information they can request. It also requires them to provide information about the debt and inform you of your rights as a consumer, including how to dispute the debt.

• Fair Credit Reporting Act (FCRA): The FCRA limits the information consumer reporting agencies can collect. If you dispute information with a creditor, the item must appear on your credit report as disputed information.

What are 5 rights you have around medical debt collection?

You have many rights when someone is trying to collect a medical debt from you. Below, we outline five of them.

1. Debt validation

The FDCPA requires debt collectors to send you a validation notice that includes:

• 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

Once you receive the validation notice, you have 30 days to dispute the debt in writing, or the debt collector will assume the debt is valid. If you dispute the debt in writing, the debt collector must stop efforts to collect until providing you verification of the debt.

2. No coercive reporting

Some debt collectors illegally use coercive credit reporting to get people to pay for debts they don’t owe. If those fraudulent debts aren’t paid, the information can damage your credit. But the CFPB has started cracking down on coercive reporting in medical debt collection.

Debt collectors are also prohibited from using deceptive tactics to get you to pay. For example, they cannot:

• Claim to be someone they’re not, such as a government representative or attorney

• Falsify how much you owe or the status of the debt

• Claim you’ve committed a crime by not paying

• Say they are calling from a credit bureau

If you believe a debt collector is using coercive reporting or other deceptive tactics to collect money, you can submit a complaint to the CFPB online or by calling 855-411-2372. You can also report them to the FTC.

3. Ways to contact

The FTC strictly regulates how debt collectors can contact you. For example, they cannot:

• Call you more than 7 times within 7 days or, once they speak with you, call back within a week

• Call you before 8AM or after 9PM your time without permission

• Share the details of your debt with anyone other than yourself, your spouse, and your attorney (if you’re represented by legal counsel)

If a debt collector can’t reach you, they can contact other people in your life to get your contact information. Once they have your information, they are allowed to contact you by:

• Phone or text message

• Email

• Mail

• Social media (direct or private messages only)

A debt collector can report a debt to a credit bureau if they speak to you by phone, speak to you in person, or send a communication by mail or electronically and wait 2 weeks to ensure it isn’t returned as undeliverable.

You should keep a record of any communication or documents you receive in case you need to dispute the debt. That includes a receipt of a request not to be contacted, which can be done by fax or certified mail.

4. Statute of limitations

The statute of limitations is the period of time when a debt collector or creditor can file a lawsuit against you. This usually begins on the date of your last payment or missed payment and, in most cases, lasts for 3 to 6 years, depending on the state.

You will still be responsible for paying the debt after this period ends. And debt collectors can still contact you. However, if they try to sue you, they could be in violation of the FDCPA. If you do not pay the debt, it will fall off your credit report after 7 years.

5. No Surprises Act

The No Surprises Act helps keep privately insured people from getting unexpected bills for out-of-network care at outpatient surgery centers or hospitals. It covers all emergency care as well as nonemergency care at in-network facilities.

If you receive a surprise medical bill, dispute it by contacting the No Surprises help desk at 800-985-3059. If you don’t have health insurance, request a good faith estimate of the expected charges before receiving care. If your bill is at least $400 above the estimate, you can dispute the amount.

This method works best while a medical debt is still in good standing — meaning, before the bill goes to collections.

What are ways to avoid having medical debt go to collections?

Here are some ways to keep medical debt out of collections:

• Ask about your charges upfront, if possible. If you don’t have health insurance or will self-pay, you should request a good faith estimate of expected charges.

• When you’re billed, always check for errors, such as duplicate charges, and dispute them if they exist.

• After checking your bill for accuracy, try to negotiate costs with the provider’s billing department.

• If you’re uninsured, find out if you qualify for financial assistance programs, which can greatly reduce your bill.

• If you have insurance, make sure your health plan has paid its share of the costs and what you owe is accurate.

• Ask the provider or facility that you owe about a payment plan and specifically mention that you are trying to avoid the bill ending up in collections.