When is a Medical Bill Sent to a Collection Agency?

March 5, 2012 in health care costs, Health Insurance, Hospital Bills, Insurance Bills, Medical Care, Medical Debt

A recent article in the Chicago Tribune’s March 4, 2012, issue “Small, Paid-off Medical Debt Can Mar Credit, Upend Financing for Unknowing Americans” highlighted how quickly a pristine credit can plummet when unexpected medical bill balances show up on credit reports including previously paid off medical debt. According to the Commonwealth Fund, 30 million Americans were contacted by collection agencies in 2010, an increase of over 25 percent from 2005. And, the Access Project, a research group funded by health care foundations and advocates of tougher laws on medical debt collectors, estimate that over 3 million Americans who have paid off their debt in full still have their balances appearing on their credit reports. Most of the collection actions are attributed to medical bills with the majority of outstanding balances under $250.00.

Medical bills are sent to collection agencies quicker than you think. In fact, it is common to receive a bill within a few days or so of your procedure or hospital stay and the clock starts ticking. So, what can you do to minimize your account from being turned over to a collection agency?

  • First and foremost, do NOT ignore your bill! If you haven’t already done so, immediately communicate with your medical provider informing them of your financial situation. Most providers will collaborate with you on options when they know you are actively working to resolve the balance.
  • Be persistent and polite.
  • Get everything in writing even agreeements; follow up in writing yourself. Did you know a provider may choose to turn your account over to a collection agency if you miss an agreed upon payment or they feel you aren’t paying the balance down fast enough? Thorough and organized recordkeeping is a must including names, dates, what was said, etc.
  • Submit written communication when disputing your bill or requesting a bill audit for errors. You may want to make good faith payments until the dispute is resolved. Again, get this in writing.
  • Regularly check your credit reports for incorrect listings such as disputed bills that were reported as unpaid accounts. Submit a letter of complaint to the credit bureaus explaining the dispute. The bureaus must review your complaint and correct their reports.

Medical debt can appear on your credit report for seven years, even if it was paid off or settled.

In June 2011, bill H.R. 2086: Medical Debt Responsibility Act of 2011 was introduced. Should this pass, it will provide relief for Americans by excluding “from consumer credit reports medical debt that has been in collection and has been fully paid or settled, and for other purposes”. To support this bill, contact your Congress member.

43 responses to When is a Medical Bill Sent to a Collection Agency?

  1. Do you know how long would take for a hospital to send a bill to a collection agency? Let’s say that I was on debt for 3 months, would this bill with a collection agency by this point?


  2. Great question. It depends on the hospital’s financial policy as to when they turn an account over to collections.

  3. I have a question. I never received a bill or phone call for 2 1/2 years then I got a letter from collections for a medical bill. I was told my insurance covered it. I even paid for the 20% the insurance wouldn’t cover. Then I get this collections bill a long time after. Is it legal to send me to collections after 2 1/2 years?? When I honestly thought it was taken care of?

    • Thanks for the question! Each state has a statute of limitations on how long a debt can be collected on so yes, it may still be legal. I would contact the collections agency and your provider.

    • Paige – sounds odd and what a hassle! Bu in short, I don’t know if collections has to act within a specific time frame. The rules may vary from state to state. Where do you live? Let me know and I’ll see what I can find out.

      • This just happened to me this morning! I honestly don’t even recall seeing the provider they stated on the phone, but I did ask them to send me proof of my debt, date of service and provider information. I live in Michigan and if I understand what I’ve been reading online today they have up to 6 years to make first contact regarding a debt. It’s not on my credit report, but omg!

  4. I received a letter from a collection agency after 3 weeks from receiving my first bill. About 7 days prior I had paid half of the balance due at my dentist office. The letter stated the full amount. A week later I received another letter from the collection agency as well as from the Dentist office. In a total of 4 weeks I have received 3 letters from the collection agency, 2 from the dentist office, all sounding like I am a person who has not made any effort to pay my bill in months when in fact I paid half my debt in person less than 2 weeks from receiving my bill. I have since paid the remaining balance. I have not checked my credit report yet. If it shows up on there is there legal action I can take against the Dentist for wrongfully accusing me on not paying my bill? This Dentist office didn’t even give me a chance to pay it.

  5. Contact the financial manager of the dental office immediately, preferably in writing and by certified mail with a return receipt, and explain the situation along with your payment documentation. Also, contact the collection agency, in writing and by certified mail with a return receipt, with your payment documentation and explanation. Accounts sent to collections are not always reported to a consumer reporting agency. However, if yours was, request that the dental office take back the account from collections and remove it from your credit reports. Again, you’ll want to be sure to have written documentation directly from the reporting agency that it was removed. You can also file a direct dispute with the reporting agency (http://www.askdoctordebt.com/13611-Dispute-a-Debt). Finally, you may want to contact a consumer law attorney for legal advice (http://www.naca.net). (As each situation is unique with extenuating details, this response does not represent legal advice and is for informational purposes only.)

  6. Is it true that if I make at least one payment a month and so not miss a payment that my bill cannot be sent to collections?

    • It depends on your hospital’s financial policy and what agreement you have, in writing. Even then, we have seen some providers turn the account over to collections. It’s wise to communicate regularly with your provider.

  7. Is it true that making constant monthly payments will keep my balance out of collections, even if the bill is not paid in full within 90 days (as stated by the hospital).

  8. The lab that did my medical tests had the wrong address and I didn’t receive my bill. They called me three days ago to verify the address but apparently in the meantime they had turned me over to a collection agency. I still have not received a bill, just a letter from the collection agency. Is this legal, and will it still affect my credit score?

    • You may want to call the lab and have the bill recalled from the collection agency. If you know who you spoke with and when, be sure to reference in the call. Get all responses in writing so you have a trail.

  9. I made a verbal agreement with the medical billing office and have made the agreed monthly payments but they placed me in collections. In fact they are still accepting payments from me for my bill. (I set up automatic payment). Is this legal?

    • You may want to contact your provider and speak with the billing or practice manager to find out what happened. If they agree to recall the account from the collections agency, get the payment plan arrangements in writing signed off by you and the provider.

  10. I currently work for patient accounts in a medical office. We have rolled over to using a new system and i am having to clean out the old. I am finding patients with debt that hasn’t been collected on in over 5yrs. Is it still legal to send these patients to collections after such a long time? Or is there a cut off on how long you can have an uncollected account before sending to collections?

  11. Hello,

    So last year I had a root canal. I paid for the first procedure however I still had a balance of 1300 before my insurance check which never came. I am working with insurance to have to check reissued however I had recieved a call from a Christopher house stating he was a lawyer for usb mediation. He said that I was being served a court summons and that I would be given a judgment and all this bad stuff would happen. I then recieved a call from a man calling himself don Davis from the eire county clerks office. He left me a message telling me he was constructing the order and that he was going to serve me that day. When I had checked my call log the number he called from was private. I googled the number to the office and spoke to a woman stating that no one worked there by that name. On top of that he then told me to contact Mr. House again at a 800#. Mr. House told me he was representing my dentist but said he was going to fight for me. He also told me I’m not allowed to contact my dentist due to conflict of interest. I do owe the debt but something seems funny. I called the BBB and they had no information on the company they are from. I live in new York. Does this sound legit? I recieved no letters from the company stating any of the information. Just phone calls from 800 and the private number from the clerks office…I want to pay the debt back however I do now want a.judgment or garnishment which he said would happen. Any input? Do they even attempt to collect before a judgement is put against a debter I don’t know what to do

  12. He also said he was in contact with my dentist to talk about what payments would be acceptable. He told me my dentist didn’t want or have the need to speak with me. Do they really work with them because if not this man is speaking on my dentist behalf. After a few calls he said they had a meeting with my dentist to go over options. An can a summons be pushed back by a lawyer calling the clerks office? Sounds like bologna

  13. I am disabled and my doctor, who performed a in-office surgical procedure the same day I was there for a simple skin cancer screening, has turned a medical bill over to a collection agency. I was not told how much the procedure would cost, or that my insurance would not cover it. The doctor would not accept small payments, only two-three large payments to pay the huge bill. They immediately turned me over to a collection agency. I am barely making ends meet, and now I have a collection agency harassing me to pay the bill. I have worked extremely hard to get my credit in very good shape. Now, I have to worry about having to pay higher interest rates and being denied future credit.

    How will making a payment arrangement with a collection agency affect my credit? It will take approx. 2 years to pay off this debt making monthly payments.

    Do I need to get a payment arrangement in writing with the collection agency? I want to keep my credit in the best shape possible. How do I get this off of my credit report once it is paid off?

    Any advice would be most appreciated.


    • It depends in the collection agency’s contractual arrangements with your doctor as to whether or not the deb will be reported to a credit bureau. Yes, it is in your best interest to obtain a written payment plan agreement from the collection agency. Once the balance is paid off, request that the collection agency removes the account from credit bureau reporting. Also, request that this confirmation be provided to you in writing. You may also want to do your due diligence and confirm with the credit bureau that this has been done.

  14. I have a court date for this Friday for a medical bill that the provider should have submitted to the Insurance. They never did and want to make me responsible for the charges. When I talked to the insurance they told me as the provider is in-network they supposed to submit the charges within 90 days to the Insurance an this is their fault and the should write it off. They never did and now I will need to defend myself. can someone suggest a link where I can read any information about the current laws with regard responsibilities for medical bill payments.

    • If there is a contractual clause between the provider and the insurance company regarding timely filing of claims, a provider can not bill the patient for the account balance if a timely filing issue is proved. You can contact the insurance company’s appeal department and or appeal to your doctor’s office to get it resolved.

  15. LC said on April 11, 2013

    I have contacted the collection agency that took over my medical accounts and they advised me to call the hospital where the services were rendered to get specific dates. I called the hospital and I was told that they were for accounts from 2004 and 2006. These accounts are not going to be written off despite the 7 year period. We are trying to clean up my credit report. I called last year and I was told that it would be written off because of the account being so old; yet the debt still shows on my credit report. These hospital visits were paid in cash because I did not have a bank account much less an ATM card at that time. I am having a hard time trying to locate those receipts given the time frame. Any advice on what to do? Thanks

  16. Good evening, I recently received a collections notice for a medical bill that I had worked out a payment plan, and paid on time every month. I contacted the billing company to find out what happend and was told the hospital had taken over the account from them and I was now to make all payments to them from now on. I then contacted the hospital and spoke with someone who told me that due to the billing company not reporting the payments to all of the necessary departments, the hospital turned it over to collections, even though they were showing the payments were coming in on time. They also, told me they could not get the account back from the collection agency, even though, as of writing this, its only been 2 days since it was turned over. This exact situation has also happend this week with my wife and father. Any sugggestions on what to do next?

  17. If you have an Agreement in writing between you and the hospital, talk again with the hospital’s financial services department head. If not, you may want to contact a consumer law attorney that specializes in debt collection issues.

  18. I have a hospital bill. The cost 3,000. I had someone call me today. Guess she was a bill collector. She was very rude and question me on why I haven’t paid on it. I told her i only work part time and I’m a college student. She asked if I received financial aid. The way she handled everything was unprofessional. I attempted to explain ,y reason and she was still very rude. What should I do?

  19. I am disputing a medical bill’s coding, and resulting lack of insurance coverage. I’ve spoken with the doctor’s office several times, and they keep responding that their is nothing they can do without addressing any of my issues. They are now threatening to send me to collections, I want to avoid collection agency harassment – what can I do?

  20. Hi, I have just been contacted by a collection agency last week. They informed me that they had filed a law suit against me for past due medical bills. I asked how much I owed and was told $126.00. I had asked if there was anyway the suit could be stopped and she told me it would if I paid the amount in full by the end of the day. I called my dad and did a conference call with him and the collector. He asked her if the amount I owed was $126 and she agreed. He then gave her his credit card number and she repeated the number back and said she would be running it for $926.00!!! We both questioned her and told her she stated it was $126. She denied that she had said this and questioned why she would lie on a recorded line. I nor my dad was ever informed that we were being recorded, I let her know that and she proceeded to say that the call was being recorded and would I like the rest of my Miranda rights read to me! First of all I have never once had any contact by this agency until last week, secondly is it illegal for you not to be informed of a recorded conversation? And thirdly is her comment about reading me my Miranda rights a form of harassment? I have contacted the hospital that I owe money too, because I have a letter of collection from another company with the supposed service date she is trying to collect on and the amount it for $100. I’m utterly confused here.

  21. Yes, collection agencies are required to let you know before the conversation begins that they are attempting to collect a debt and any information obtained will be used for that purpose. Yes, they should have given you notice that the call was being recorded. In addition, you should have received a notice from the collection agency that provides you the option to validate (verify) that the debt is yours. You may want to file a formal complaint against the collection agency.

    • who would I file the complaint with? Also now I am getting a call from another agency for the same debt.

      • There are a couple of consumer watchdog agencies along with your state’s attorney general office: (naag.org) and the Federal Trade Commission (ftc.gov) and Consumer Financial Protection Bureau (consumerfinance.gov). Be sure you know your state’s specific debt collection laws as well. With respect to a second agency contacting you, you may want to request written validation of the debt – from both companies. This means they have to produce a copy of the debt owed so you can verify that it is your debt. These are suggestions only and do not constitute legal advice or similar.

  22. In Jan. 2103 I accumulated $22,000 in doctor and hospital bills which either I or my insurance paid, all in a timely matter. Today I received a call from a collections agency that I owed $297 that hadn’t been paid to the ER doctor. I never received a bill or a phone call. Yes they had my correct address and phone #. Art Medical Billing is refusing to recall the information that they furnished to the collections agency. I certainly want to pay the bill, as I pay all my bills and never had a credit problem in my 58 years. ART has instructed me to pay the collections agency to get this taken care of. I am not pleased with that answer. I have asked a supervisor from ART to call me. No one has yet. What do I do??????

  23. Hello my loved one! I wish to say that this article is awesome,
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  24. Hi,

    I have disputed a bill to the University of Miami Medical Center for failing to provide promised services. I sent my dispute by certified mail three times and by fax as per request twice. Never got a response from them but they sent me to collections. What can/should I do?

    Thanks for your reply!


    • Hopefully you have confirmation receipts for the certified mail.
      You may want to speak with the highest departmental manager of the department that received/requested your dispute documentation.
      You may also want to contact the collection agency.

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