What Can You Do If Your Medical Bill Goes to Collections?

Millions of Americans struggle to pay their medical bills — even if they have health insurance. An analysis of consumer credit reports from 2009 to 2020 found that about 1 in 6 people in the U.S. — an estimated 17.8% — had medical debt in collections.

Having medical bills in collections can be stressful. If you don’t pay, the debt could end up on your credit report and damage your credit score. Some people end up filing for medical bankruptcy to eliminate or reorganize the debt to get a fresh start.

If your medical bill goes to collections, you have several options. But it’s best to act quickly to prevent damage to your financial situation.

What does it mean when a medical bill goes to collections?

If you don’t pay your medical bill on time, your healthcare provider could send the debt to a collection agency. This can happen even if you’re making payments or make late payments.

Once the debt is in collections, the agency will typically try to contact you. If you don’t pay within a certain time frame, the agency could:

• File a lawsuit against you

• Get a judgment from the court to garnish your wages or bank account

• Get a judgment from the court to place a lien on your home

If you have medical debt in collections, you have certain rights under the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). These federal laws limit the ways in which debt collectors can contact you. For example, debt collectors cannot:

• Use unfair, deceptive, manipulative, or threatening tactics to get you to pay

• Report an unpaid debt to the credit bureaus without first trying to reach you

• Contact you excessively

• Speak to other people in your life about specifics of the debt without permission

• Try to collect on a debt you don’t actually owe

• Use coercive credit reporting

Do medical bills in collections ruin your credit?

They can, but you have some protections that give you more time to settle the debt. The credit reporting agencies — TransUnion, Equifax, and Experian — must wait at least 12 months before adding medical debt to your credit report. This gives you some time to try to resolve the debt before it can hurt your credit score. Starting in January 2023, the credit bureaus will stop adding medical debt less than $500 to credit reports.

Once reported, unpaid medical debt will remain on your credit report for up to 7 years — just like other debt. On the FICO scale of 300 to 850, a medical debt collection can lower your credit score by as much as 100 points. This could hurt your chances of qualifying for other forms of credit, such as loans or credit cards, or raise your interest rates on those consumer products.

The good news is that the credit bureaus no longer include paid medical debts on your credit report. Once you’ve paid the debt, it’s removed from your credit report.

What should I do if my medical bill goes to collections?

When a debt collector contacts you by mail, phone, or other method about an unpaid medical bill, they must also send a debt validation notice within about 5 days. This letter should include:

• 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’ve received this notice, you have 30 days to either dispute the debt or request more information. If you don’t respond, the collection agency can assume the debt is valid. If you dispute the debt in writing, the debt collector must stop efforts to collect until they provide you with verification of the debt.

If you expected your health insurance to pay part of the bill, check for errors and make sure your health plan has paid its share of the bill.

What options do I have if I cannot afford my medical debt in collections?

Regardless of how much you owe, if you can’t afford to pay medical debt in collections, here are some options:

• Negotiate your medical debt. Some collection agencies will work with you on an income-driven repayment plan. Others will agree to settle the debt for less than the original amount. Get everything you agree to in writing.

• Write a medical hardship letter. You can request partial or full debt forgiveness from a collection agency. Explain why you cannot afford to pay. The agency may be willing to settle the debt for a smaller amount. They also may waive late fees or interest charges. Debt forgiveness, sometimes called debt cancellation, happens when the creditor no longer pursues collection of an unpaid debt. This typically doesn’t affect your credit score, but the forgiven amount could be reported to the IRS and can be taxed as income.

• Consider bankruptcy. As a last resort, you may consider filing bankruptcy to eliminate or reorganize your medical debt.

What is the statute of limitations on medical debt?

The statute of limitations is the time period during which a debt collector or creditor can file a lawsuit against you. The clock usually starts on the date of your most recent payment or when you miss a payment.

On most medical debts, the statute of limitations is 3 to 6 years, depending on the state.

You will still be responsible for paying the debt after this period ends. Debt collectors can still contact you. However, if they try to sue you, they could be in violation of the FDCPA. 

How can I get out of medical debt collections quickly?

Contacting the collection agency soon after receiving notice about the medical debt is the best way to quickly resolve the situation. If you wait too long to ask for a payment plan or a payoff amount, you could face a lawsuit — which will certainly prolong the process.

Resolving the medical debt quickly also has benefits for your credit report and credit score, as we will discuss next.

How long does it take for a collection to fall off your credit report?

Most debts in collections will remain on your credit report for up to 7 years. But as of July 1, 2022, paid medical debts now are removedfrom your credit report. You also may be able to wipe medical debt from your credit report by negotiating its removal.

Can I get my medical bills forgiven?

Some medical providers will forgive or reduce your medical bills. You may need to prove financial hardship, such as a disability, that keeps you from working or limited household income. There also are some local, state, and federal financial assistance programs that could help. These options are best pursued, however, before your bill goes to collections.

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Written by:

Angela Mae Watson

Angela Mae Watson is a freelance personal finance and health writer. She has more than 8 years of experience educating about financial awareness and literacy.

Edited by:

Cindy George, MPH

Cindy George is the senior personal finance editor at GoodRx. She is an endlessly curious health journalist and digital storyteller.

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