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Managing Medical Collections Before your Credit is Ruined
By Wendy Clay on November 5, 2011

woken-up-(1).jpgReceiving unexpected medical bills for impossibly high amounts is enough to make anyone’s head reel. Unfortunately this situation can get much worse if your debt is then sold to a medical collection agency. Unlike doctors and hospitals, these medical collection agencies often take it upon themselves to report your debt to credit reporting agencies. Once reported, medical debts in collection can leave a detrimental mark on your credit score for seven years at the least. Despite this, there is still hope regardless of whether or not your debt has already gone into collection or if you are on the brink of having it sold to a medical collection agency.

If your debt has already been sold to a collection agency your first action should be to contact the collection agency and determine whether or not they have reported your debt to the credit reporting agencies. Depending upon this, you can then attempt to negotiate a deal in which the bill will either not be reported or be removed from your credit report as long as your bill is paid off by a specified date. When negotiating, it is extremely important to have the terms of the agreement in writing. If you find that the paid off debt is still listed on your next credit report, the only way you will be capable of having the problem resolved is by presenting written proof of your agreement with the collection agency to the credit reporting agencies. A new law entitled the Medical Debt Responsibility Act of 2011 has been proposed to ensure that paid debts are removed within a short period of thirty to forty-five days. Regardless of this bill’s passage, it is still important to keep written copies of your agreements and to thoroughly scan your credit report.
If you do not have medical debt in collection but are behind on medical bill payments, it is possible to avoid having your bill sold to a collection agency. By contacting the billing office of your medical provider and explaining your current financial situation, you may be able to convince them not to send your bill to a collection agency and negotiate a repayment plan. Also, if you find that you have been billed for something that you believe the insurance company should have paid for, don’t ignore the bill! You can negotiate with your insurance provider later to be recompensed for the amount, but you want to make some payment towards it so it does not get sent to a collection agency. Finally, check your credit report thoroughly and keep your billing information up to date.

Although the former point was mentioned above, it is very important to scan your credit report closely because occasionally the only way a person realizes they have a medical bill in collection is through the appearance of a random unpaid debt on their credit report. This can occur when the original medical bill does not reach a person because their billing address is incorrect and essentially goes straight to collection when the payment date is missed or in cases of medical identity theft. If this happens to you, write to the collection agency to dispute your debt; in response they should tell you where the debt originated. Once the debt is validated as your own, you can then begin the negotiations described above.
Sources:

Coping with Medical Bills and Debt. Wisconsin Department of Health Services, 9 May 2011. Web. 5 Oct. 2011 <http://www.dhs.wisconsin.gov/guide/spec/probdebt.htm>.

Disputing a Debt. Wisconsin Department of Financial Instituions, 2011. Web. 5 Oct. 2011
<http://www.wdfi.org/wca/consumer_credit/credit_guides/disputing_a_debt.htm>.

How Unpaid Medical Bills Can Lead to Bad Credit. 2010. 5 Oct. 2011
<http://www.repairyourcredit.com/index.php/knowledge/display/how_unpaid_medical_bills_can_lead_to_bad_credit>.

Konrad, Walecia. "Protecting Your Credit Score from the Medical Bill Maze." New York Times 18 Dec.
2010: B7. Web. 5 Oct. 2011 <http://www.nytimes.com/2010/12/18/health/18patient.html>.
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