How to keep medical bills from going to a collection agency


Brian Davis is no stranger to surgery. Born with club feet, the 35-year-old Playa del Rey resident has undergone several reconstructive foot surgeries over the years.

With an endless stream of medical procedures, doctor visits, hospital stays, rehabilitation, and a lifelong physical disability that made stable work a challenge, Davis – a former financial advisor – also became very familiar with big medical bills. He spent years struggling with debt that, at its peak, was around $ 400,000.

Each month, says Davis, “I had to decide whether I was going to pay for the insurance, the doctor or the lawyer. It was a constant juggling of finances for years. Medicare covered a large part of his care, but it was not enough to prevent him from financial problems.

Although this is an extreme case, Davis is not alone. According to the Centers for Disease Control and Prevention, more than 54 million Americans – nearly 20% of the population – struggled to pay their medical bills in 2012.

Often times, disproportionate bills lead to calls from collection agencies seeking to collect money on behalf of doctors and hospitals. In some cases, consumers are surprised by a collection notice, never having been informed of an invoice.

Last year, 1 in 5 adults – about 41 million people – was contacted by a collection agency about medical bills, according to the Commonwealth Fund, a New York think tank. About 7 million people said their account was sent to collections due to a billing error.

“It can really happen to anyone. It doesn’t matter how responsible you are; you can end up with a collection agency for a variety of reasons, ”says Gerri Detweiler, director of consumer education for, a website offering free credit scores and financial information.

Still, consumers can prevent their medical bills from going to collections, experts say. And they can help or hurt each other if a bill gets to this point, depending on how they react.

Don’t avoid bills

“The natural reaction when you can’t foot the bill is to remain silent and avoid communication,” says Lloyd Douglas Dix, attorney for California Assn. of Collectors, which represents the professionals of the collection. But that often backfires on you, forcing vendors unable to reach you to send your account to collections, which can then damage your credit.

“As long as you pay something, the doctor will usually hang on to the debt,” Dix says.

Confirm correctness of charges

According to the National Health Insurer Report Card of the American Medical Assn., Commercial health insurers have a 7.1% error rate, a dramatic improvement from its 20% finding in 2010. Nonetheless, it is important to confirm that medical bills are correct and to take prompt action to correct errors.

Any dispute you have with your insurer that delays payment should be explained to your provider. “Request that they do not send your invoice to collections until you have fixed the problem,” advises Detweiler.

If you’ve never been billed for medical services, this should be a concern as well. If no explanation for benefits comes up for some time after your visit, call the provider to find out what is going on. Finally, confirm that your provider has your correct mailing address and that your insurer’s billing address is still up to date in the provider’s system.

Know your rights

If you receive a surprise notification that your account is in collection, your first step is to confirm that the debit is legitimate.

Federal and State of California law give consumers the right to require collection agencies to send a written verification of a debt owed, and they must cease their collection efforts until they are satisfied. have complied with your request.

Additionally, California law requires debt collectors to notify you that your account has been assigned to collections and that you have 30 days to dispute it. While this is not a legal requirement, generally, according to Dix, debt collectors will send this notice before reporting your account to the credit bureaus.

If you don’t owe the money or if you’ve already paid the bill, send a written explanation to the collection agency. Send any receipts or copies of voided checks you have to support your claim. Most explanations of the benefits are online, says Dix. “You can print it out and fax it to me in two minutes.” If you did it within 30 days, I won’t report it.

Yet, Detweiler says, once an invoice is sent to collections, the law does not prevent agencies from immediately reporting it to credit bureaus. “It doesn’t matter if it’s a mistake. It can affect your credit, ”she says.

Set up a payment plan

Most medical bills are fairly small, says Lauren Rode, a bankrupt lawyer with the Consumer Action Law Group in Los Angeles. “If you get a small medical bill, instead of ignoring it, just pay it,” she says.

Be clear with the collection agency that you want the account to be completely deleted, and not reported as paid, says Detweiler. “It doesn’t help your credit score. Paid or not, a collection account is negative.

If you can’t afford to pay the bill, negotiate a payment plan with the collection agency, suggests Christina LaMontagne, vice president of health for NerdWallet, an online financial reporting company.

Just make sure you stick to your payment plan. Otherwise, says LaMontagne, “If something goes wrong and you missed a payment, the situation gets worse. At this point, the collector may demand that you pay off your debt in full or take legal action against you to recover the funds.

File for bankruptcy

In Davis’s case, having $ 400,000 in the hole left him with little choice. “It was pretty catastrophic,” he says of his debts. So he finally filed for bankruptcy.

This can be a great option for consumers, says Rode. “It’s a good thing for them to drop off and start over. Any medical debt is eliminated in a bankruptcy filing.

And bankruptcy does something else that surprises people, says Rode. “It boosts your credit” almost immediately because it eliminates your debt, she says. But the deposit stays on your credit report for eight years, which can make it difficult to get a loan to buy a house or a car.

Filing for bankruptcy allowed Davis to get out of his crippling debts and embark on a new life, he says. “I’m going to be able to start over because of this.”


Free Credit Report: and offer free credit reports.

Juridical help : Contact the Consumer Action Law Group at or by phone at (818) 254-8413.

Complaints: Contact the Consumer Financial Protection Bureau at or your state’s attorney general’s office.

Information about the collections: Call California Assn. from the Collectors Hotline at (800) 316-2262 or visit

Zamosky writes on health care and health insurance.


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