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Medical Debt is the Most Common Type of Collection Account By Janice Parker

Years ago, my son was hit by a distracted driver while crossing a busy street. As I was headed to the scene, I began to pray for all involved. I also started processing next steps as it related to his medical care based on my insurance carrier. I didn’t know what to expect upon arrival, but based on the number of emergency personnel vehicles and yellow tape on the street, it appeared to be very serious. When I was able to see my son and speak to the EMT staff working on him, they began to update me on his condition and asked what hospital I preferred. As I’m looking at my son and talking to him, (as he was coherent of everything that was going on), I didn’t see any obvious injuries other than very minor bleeding and a missing shoe…… Praise God! I immediately responded to the EMT personnel and said “do you think it’s serious enough for him to go to the hospital?” I will never forget the look on the EMT’s face as he responded with resounding…..Umm, YES! What the EMT didn’t know were the thoughts that were going through my mind like…I already prayed for him and I trust God that he’ll be okay, he APPEARS to be fine, he’s talking to me calmly and I’ve had more than my share of medical expenses with this kid and likely was on a payment plan for another injury he had! Of course, I took the advice of the medical personnel who advised me that although his outward appearance was ok, he could have internal injuries so it was best to have him checked out at the emergency room. The next hurdle was do I take the suggestion of the EMT to have my son seen at the suggested trauma hospital instead of the hospital that was within the network of my health insurance carrier.

I know these are not decisions we want to contemplate when making a decision about our medical care, especially when we’re in an emergency situation, but these decisions unfortunately can cause many people major financial problems in the future. Medical debt can be a huge problem for people and oftentimes lead to bankruptcy. The repeal of the Affordable Care Act would cause millions to lose healthcare and dramatically reduce Medicaid resources that are essential to many people in our community and make this situation even worse. Most times medical debt goes to collections because it’s overlooked by the consumer who thought the insurance company handled it or we simply don’t have the money to pay it. This doesn’t mean there’s not good intention, but maybe it doesn’t rank as a priority bill at the time of budgeting for household expenses.

Medical debt is the most common type of collection account, representing nearly half of all reported collections. Almost 1 in 6 credit reports contain a medical debt collection, according to the Federal Reserve. Medical debt collection is profit, for both the doctors and hospitals that sell your debt and the collection agencies that call and sometimes even harass you for payment. Hospitals can sell your medical debt for pennies on the dollar to collection agencies. These agencies pursue you for the full amount owed, even when they’ve only paid a fraction of that.

Questioning Medical Debts

Run your credit report every year. You can obtain a copy from all three credit bureaus once a year at This is where you can make note of all the debt collections, who owns them, and their contact information.

If you identify a medical debt collection on your credit report, you can take the following steps:

1. First determine if the medical debt is actually yours. If not, send a dispute letter directly to the credit reporting agency who is reporting it (TransUnion, Equifax and/or Experian). Take note that I didn’t say directly to the collection agency. Send a well-written, non-aggressive letter disputing the debt. Send only certified mail, with signature confirmation. Keep record of the date(s) you send each letter to each debt collector. If you need assistance writing a dispute letter, please visit and search for “sample dispute letters.”

2. If you’ve determined that the medical debt is yours, contact the original creditor whom you owed the medical debt to and attempt to negotiate a settlement or pay the debt in full. If they are unwilling to work with you, contact the medical debt collector who is reporting on your credit report. Seek out professional help on how to make this contact and get advice on how to negotiate if you don’t feel comfortable doing it on your own. Be sure that you received the settlement in writing BEFORE you make any payments or payment arrangements to the debt collection company.


3. After negotiating or paying the debt off in full (whichever you agreed to do), wait about 45-60 days after payment was received and re-check your credit report to ensure it reflects properly.

Always send letters by certified mail with signature required. It may be tempting to just mail a standard letter to a medical debt collection agency, but if you fail to send a certified letter, there is no record of you sending your validation letter, which makes it impossible to prove the debt collector received it. Once you have mailed your letters, one of two things should happen: either you will get a letter stating the debt has been deleted, or they will validate your debt.

Your Medical Debt is validated

This can become tricky for the consumer who is not educated about consumer laws and especially as it relates to the HIPPAA Act. There is personal data that your original creditor (hospital and/or health care professional) can’t share with a debt collection agency due to the HIPPAA Act, which can make it very difficult for medical debt collector to validate the debt. For this reason, you should become knowledgeable of the Fair Debt Collection Practice Act. The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business. If in fact the medical debt is validated then you should make the arrangement to repay the debt. This can be negotiated for a settlement, payment plan or pay in full with a request to remove it from your credit report.

Medical Debt Collection Agency Fails to Reply

If the medical debt collection agency fails to reply to your letter, you should then compose a letter to the all three major credit bureaus, and include your original letter to the debt collector and ask them to immediately remove the item from your credit report. Your letter should state that you made an attempt to validate a debt on your credit report and you have yet to receive any validation or a reply from the medical collection agency.

The key to successful debt validation is being knowledgable, persistent, organized and patient. If you lack any of these qualities, you may need to seek the help of a professional who can assist you. Remember medical debt collections can cause substantial damage to your credit rating. Once damaged, it can take years to restore one’s credit rating. When making decisions about your health care, be sure to consider the short and long-term cost of your decisions. By no means am I implying that you question the advice of the medical professionals as I did in my son’s case, but you should be knowledgeable about your insurance coverage so that in an event of an emergency you make the best choices not only for your health, but your financial future.