Dealing With Medical Bills In Collection

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Dealing With Medical Bills In Collection

Your credit score is an important financial tool that helps lenders and other financial agencies know the state of your finances. Any type of debt that goes unpaid after a certain period, will get transferred to a collection account which will reflect on your credit report. The presence of collection accounts on your credit report can significantly lower your credit score.

If you have any unpaid medical bills or medical bills you can’t afford, you should check with your insurance company to see if they will cover it. If your insurance provider refuses to cover your medical bill, you should try to set up a payment plan to avoid the bill going into collections. So what happens if your medical bill is in collections? Here is how to deal with that:

Medical Bills And Credit Reports

Medical bills do not appear on your credit report except you default on your payments. The bill only appears on your credit report only after your debt has been sent to a collection agency for retrieval. If you settle your medical bills on time, you shouldn’t have to worry about it tainting your credit report. This is why you should avoid leaving your medical debt unpaid for too long or it will be reported to a credit bureau.

The duration health providers wait before sending your debt to collections usually varies depending on the provider. Some providers wait for 90 days before taking action while others wait for 180 days. Although credit bureaus give a grace period of 180 days for settlement of medical debt. Hence, if your debt gets sent to collections earlier than 180 days, the credit bureau gives you till the end of the 180 days before the unpaid medical bills reflect on your credit report.

Therefore, even after your unpaid medical bills have been sent to collections, you can take advantage of the 180 day rule. Paying your debt before the grace period elapses guarantees that your credit score will not be affected.

Do Medical Bills In Collections Affect Credit Scores?

Credit history age, credit card usage, and payment history are some of the factors that are used to calculate your credit score. Of these factors, payment history is the most significant and has the most say on how your final score turns out. Like all other unpaid bills, medical debt will show up in a collection account which will then affect your credit score negatively. The level of impact could vary depending on the amount owed and the duration of this unpaid debt.

You shouldn’t despair overall because medical debt in collection accounts affect credit scores a bit differently from other types of debt. Some credit scoring models do not view medical debt as heavily as they view some other types of debt while others will ignore medical bills if the original amount owed is less than $100. Nevertheless, it is important that you avoid having medical debt go into account collections because whether significant or not, it will bring down the rating of your credit score and affect your standing with lenders.

Do Medical Bills In Collections Go Away?

The longest time medical debt can reflect on your credit report is seven years. Even if you do not settle your debt after this time it ceases to reflect on your report. Although you should not neglect your bills simply because they would go away from your credit report after seven years as this can severely damage your credit score. If you leave your medical debts unattended to or neglect them, debt collection agencies are free to come after you for the money.

The statute of limitations (in simple terms, the time within which legal action can be taken) is usually between three to six years.  Debt recovery agencies will take you to court in an attempt to collect the money that you owe. Court battles would lead you to spend more money than if you had begun paying your medical debt which is why it’s never advisable to ignore your debt.

The best way to deal with such issues is to protect yourself by filing for bankruptcy. If you are financially unable to pay your bills, filing for bankruptcy will protect the little you have left and prevent you from further legal troubles with debt collection agencies. 

How To Pay Off Medical Debt in Collections

Debt settlement remains the most reliable way for you to deal with Medical bills in collections. Although most financial experts will rate mortgage and credit card debt over medical debt, it is imperative that you do not ignore your medical debt. If you find yourself uninsured and are trying to pay your medical bill, you should talk honestly with your doctor/hospital for a suitable payment plan acceptable to both parties.

To make the payment process easier, you could request an itemized bill which will give you a breakdown of how much you were charged for each service. This could make it easier for you to pay and you could also crosscheck these services with your insurance plan to see if any of the procedures are covered. It is important that you start your payments as quickly as possible and stick to your payment dates. 

Also, check what part of your medical bill will be covered by your insurance and what parts you would have to cover yourself. This would give you a realistic view of how much you will need to pay out of pocket. With this amount in mind, you can now plan how much you can afford to pay monthly, weekly, or quarterly depending on the payment plan you agree on with your hospital.

How To Remove Medical Bills From Your Credit Report

When unpaid medical bills get on your credit report, simply paying these bills might be unable to get them off. Medical collections can stay on your report even after you have paid all your outstanding medical debt. So what do you do if you are in this dilemma? There are two things you could do:


Ensure that you challenge any medical bills that show up on your credit report after you have paid them. It could have been placed on your report by mistake or it could be a case of fraud. The important thing to do is to challenge it immediately when it’s discovered.

Contact your Insurer

If you pay your medical bills in collection it could still remain on your report for up to seven years but if your insurer pays, credit bureaus automatically remove it from your credit report. Contact your insurer to ensure that they have not missed any bills they were expected to cover. Speak to your insurance rep as soon as you find out.

Final Word

If you find yourself with a mountain of medical bills you are unable to afford, do not despair. Talk to your hospital and figure out a convenient plan that will allow you to settle your debt. If you do not feel comfortable negotiating with your hospital, you could hire a debt advocate to negotiate on your behalf. The important thing to note is that settling your debt is the best way to rid yourself of bills and keep your credit score high.

Sources – Become Debt Free