At a Glance

When you have unexpected medical or hospital bills, the expenses owed can add up quickly. Before you know it, the debt may be more than you’re able to pay, which could result in your unpaid bills being sent to medical debt collections.

According to recent research:

  • 55% of U.S. adults aged 18-29 were extremely concerned that a major health event in their household could lead to bankruptcy.
  • 66% of millennials in the U.S. have been in medical debt due to medical bills.
  • 25% of U.S. adults say they or someone in their household currently has medical debt they will be unable to pay in the next 12 months.
  • 10% of American adults who have medical debts owe $10,000 or more.

These statistics are intimidating, but the good news is even if your medical bills are sent to collections, you have options to pay off your debts and repair your credit.

In this article, read to learn:

Can medical bills go to collections?

If you don’t pay your medical bills on time, you’ll be contacted by the medical facility to settle your account. If you continue to avoid payments, or even if you’re making payments but they are late or too small, the facility will likely send your bill to collections.

Debt collectors are third-party companies that collect unpaid debt from people who haven’t paid outstanding bills. Your debt is sold to these collection agencies typically because it’s more cost efficient to have the agency collect your debt rather than the hospital spending their own time and resources doing so.

If your medical bill goes to collections, the debt collector will continuously try to contact you through letters, phone calls, mail, and even emails in order to get you to pay your debt.

What happens if you don’t pay medical bills in collections?

The first thing that happens if your medical debt goes to collections is it will decrease your credit score, sometimes by up to 100 points. While it drops off your report when it’s paid, leaving it unpaid can impact your ability to get additional loans or credit cards.

You’ll also likely be charged late fees or non-payment penalties, which can add to the total you owe. You may also be charged interest on your total amount.

Finally, the collections agency can take you to court. Your provider can sue you for an unpaid bill, and what happens would be up to the court. While you can’t be sent to jail for the debt itself, the court may order a wage garnishment, which means they take a certain amount of money out of your income until the debt is settled. They could also put a lien on your property, which means the medical facility can obtain access to the property if debts are not paid.

Medical bills collections laws

If you have medical debt or it was sent to collections, there are a few laws in place to help protect you and your finances:

  • The Fair Debt Collections Practices Act (FDCPA), enforced by the Federal Trade Commission (FTC), makes it illegal for debt collectors to use abusive, unfair, or deceptive practices when they collect debts.
  • The Fair Credit Reporting Act gives you the right to challenge inaccurate information on your credit report.
  • Section 1.50(r)-4 of the Federal Internal Revenue Code requires non-profit hospitals have a written financial assistance policy. They must also describe any collections actions the hospital would take if you’re not able to pay your bill

There may also be some state laws designed to protect those who are unable to pay their medical bills. Check with your state government to learn more.

How to negotiate or dispute medical bills in collections

If you have medical debt that you’re not able to pay, the first step is to contact the doctor or medical facility as soon as possible to talk about what options may be available to you. If the debt has already been sent to collections, it’s important not to ignore it and instead work quickly to negotiate or dispute the bills.

In fact, a recent survey states 60% of adults in the U.S. with medical debt were successfully able to negotiate their debt.

First, contact the collection agency to see if you can work out a payment arrangement. If you can’t pay the debt in full, you may be offered a settlement amount. The downside to this is since you didn’t pay the full amount, it’s still considered negative. You may also be able to negotiate making smaller payments over time instead of paying the full lump sum at once.

Keep in mind that there is a statute of limitations on how long the creditor can legally attempt to collect the money you owe. This varies by state, but if your medical debt is several years old, it may be past the statute of limitations. However, collection accounts can remain on your report for up to seven years.

Finally, be sure to dispute any inaccurate information. For example, if you paid off the debt they sent to collections, or the amount isn’t what you are supposed to owe, you can submit documentation to support your claim.

How to pay medical bills in collections

If your bills are in collections and you’ve already attempted to negotiate or dispute them, there are steps you can take to pay off the debt.

  • Request and review documentation. Before making payments, request written documentation of any bill that was sent to collections. Make sure what you’re being charged is accurate (and dispute any inaccuracies). Ask for the items to be itemized so that the bill is easier to understand.
  • Make a plan for your situation. If you can pay off a bill in full, do so. If not, create a plan to ensure you can pay it off quickly. Analyze your monthly income and expenses and figure out where you can cut back on spending. Decide how much you can afford to pay toward the bill each month, and begin making payments as soon as possible.

Set a budget for yourself for necessary expenses only, and put any extra funds toward paying off the debt. If there are months you can pay more, do so.

  • Consult with a professional. There are medical advocates available to help you understand your charges, identify mistakes, and negotiate or settle your bill. Some professionals will help negotiate with the medical facility to lower your debt, or settle it completely to avoid you having to fight charges.

However, if you do seek help from a professional, be sure to do your research to ensure you aren’t falling for a scam. Look out for professionals who charge high fees, make guarantees about your debt, or contact you via mail, email or phone.

  • Check forgiveness eligibility. Depending on your financial situation, you may be eligible for medical debt forgiveness. In most cases you’ll be required to maintain proof of your inability to work, such as tax documents or other written documents. Your debt may be forgiven particularly, or in full, though this is more difficult to qualify for.
  • Make payments. Once you’ve analyzed the documentation, made a plan, consulted with a professional (if desired) and checked if you’re eligible for medical debt forgiveness, it’s time to make the payments. If you can pay off the debt in full, do so as soon as possible. Otherwise, you can work with the collection agency to develop a repayment plan or debt settlement. The sooner you can pay off the debt, the better.

You may also consider medical debt consolidation, which means you take out a loan to pay off multiple medical bills. You’d then make only one payment toward the debt consolidation loan. This helps to streamline your payments, avoid late penalties and being sent to collections in the first place, and pay less interest over time. Use a debt consolidation calculator to estimate your payments and repayment timeline.

How to prevent medical bills from going to collections

The best case scenario is avoiding medical bills going to collections in the first place. There are a number of things you can do to prevent this from happening:

  • Understand your insurance. Before any visit or procedure, check with your health insurance plan to understand what it does and doesn’t cover. Not only can this help you avoid receiving unexpected high bills, but also gives you the knowledge necessary to find mistakes and dispute any incorrect charges. Ask for or review your Explanation of Benefits (EOB) or talk with your insurance company directly before a procedure.

Also be sure to go to an in-network doctor (unless you have out-of-network coverage) to avoid out-of-network charges.

  • Ask about payment plans. If you know up front that a procedure or visit will cost more than you can afford, talk with your doctor or provider about a payment plan. This allows you to make smaller payments toward your bill over time, and prevents it from going to collections. If your provider agrees, be sure you get written documentation and understand your payment obligations, such as additional fees or interest.
  • Look into Medicaid or low-income financial assistance. If you don’t have insurance, ask your doctor about options such as a discount for a cash payment. If you don’t have insurance due to low income, check to see if you’re eligible for Medicaid.

Additionally, some hospital systems have financial assistance programs for those who need help paying for healthcare. Talk to your doctor about their financial assistance policy.

  • Use a credit card. This should be a last resort, but if you’re out of options you can put your bill on a credit card. The downside to doing this is credit cards typically have high interest rates, so even if you’re able to pay the minimum monthly payment on time, you can still end up owing more than your original bill. Only go this route if you have short-term expenses that you can pay off quickly.

Commonly asked questions

Does medical debt in collections affect my credit?

Unlike other debt, medical collections don’t affect your credit as much, though a collections status on your credit score can drop it by up to 100 points. However, this doesn’t mean you shouldn’t pay the debt. Typically, you have 180 days before the medical debt appears on your credit report, and once you pay it, it will drop off.

Can I settle a medical bill in collections?

Settling medical debt, or paying less than what you owe, is possible but is not easy. Like other types of debt, your best option is to work with a qualified professional to advocate on your behalf and negotiate an agreed upon amount for both parties. If possible, do this before the bill is sent to collections, as they are not as motivated to settle as a doctor would be.