Can a Doctor or Hospital Send Medical Bills Directly to Collections Without Notifying You?

No matter how careful you are with your finances, a medical emergency can pose a threat to your credit scores. If a doctor or hospital sends your unpaid medical bills to a debt collector, the collection agency is likely to report those debts on your credit report. Unfortunately, the FICO credit scoring formula doesn't discriminate when calculating your credit scores. Any collection over $100 has the same devastating effect on your credit scores (and sometimes collections under $100 can do the same thing depending on the version of FICO your lender pulls) This means that a collection account for an unpaid medical bill can hurt your credit just as much as a collection for a defaulted credit card.

Every mom in the world is quick to point out to their kids that life isn't fair, but the idea that a medical emergency--something you have no control over--can make lenders consider you just as high

Medical debt can go to collections

a risk as someone who just doesn't pay his bills is really and truly unfair. What's even more unfair is the fact that a hospital doesn't have to give you any notification at all before turning your debt over to a collection agency.

Some Medical Bills Go Directly to Collections

Hospitals are accustomed to billing insurance companies. If you don't have insurance (and yes, there are still plenty of people out there without it) the hospital is supposed to bill you directly. Unfortunately, this doesn't always happen. Sometimes billing errors (or pure unadulterated carelessness) result in you not receiving your bills but sometimes, hospitals send your medical bills directly to a collection agency--without even attempting to get payment from you directly.

Why Hospitals Don't Contact You First About Your Bill 

A hospital may send your bill directly to collections for a number of reasons. The primary reason, however, is convenience. To some hospitals, its worth paying the commission to the collection agency to not have to deal with your account. Billing you directly, negotiating the debt and working out a payment plan all require time and resources on the part of the hospital. It's much easier to simply send the bill directly to a collection agency and let debt collectors do all of the work. This is especially true if you have a coinsurance plan. Your coinsurance has already paid

Another reason a doctor or hospital may send your medical bill directly to collections is that this method robs you of the opportunity to dispute the bill. Medical collection agencies often put extreme pressure on you by giving you a set amount of time to pay the debt before they report the account to the credit bureaus. Once the account appears on your credit report, your credit scores suffer. This limited time frame in which to protect your credit scores doesn't give you the time you need to dispute a medical bills you believe is inaccurate--forcing you to choose between fighting for the correct amount or saving your credit scores.

What Can You Do to Prevent Medical Debts Going Directly to Collection Agencies?

Unfortunately, there are no laws requiring doctors and hospitals to notify you first before sending your bills to collections. Doctors and hospitals are original creditors. This means they aren't bound by the Fair Debt Collection Practices Act, which governs the behavior of all third-party debt collectors.

The best way to ensure that your bills are sent to you rather than directly to a debt collector is to contact the doctor or hospital's billing department and ask about their policies. Make sure that your address is correct in their system and ask if you have any outstanding bills. If you do not, call back a week later and ask again. Keep in mind that, according to your insurance provider's policies, doctors and hospitals can wait up to a year after the date of service to bill you or your insurance company, so don't stop checking up on your debt until the billing office is willing to give you a zero balance statement, in writing, for the medical services you received. In the event a collector tries to collect the debt from you in the future, a zero-balance statement from the hospital is your greatest armor against the collection agency and any potential credit damage connected to your previous medical debt.

Related Posts:

Keeping Medical Debt Out of Collections and Off Your Credit Report

Reader Question: Medical Collections Never Sent Bill

How Do I Pull My Boyfriend's Credit Report?

Lee,

How do I pull my boyfriend's credit report? This is really important. 

--Jennifer S. 


Jennifer,

I hope what you mean to ask is, "How do I help my boyfriend pull his own credit report?" Because before we go any further with this I am obligated to tell you that pulling someone else's credit report without their

Credit stalking isn't love, its illegal.

knowledge and permission is credit stalking and it's against federal law. Even big companies can get into severe trouble for doing it. It simply isn't worth a federal crime to satisfy your curiosity. You need "permissible purpose" to access someone's credit information.

That being said, since you said "boyfriend" and not "ex-boyfriend," I am going to assume that you aren't a credit stalker but rather a conscientious girlfriend trying to help the man she loves verify that his credit is accurate before he tries to buy a car or get a new apartment. Unfortunately, you still can't do this alone. You can walk him through the process, but this is something he has to do for himself.

That being said, tell your boyfriend to go to AnnualCreditReport.com. Click the option to order his free

credit report and follow the online prompts for information. This is the only website that allows consumers to get truly free credit reports without having to provide a credit card number or join some kind of credit monitoring service (Translation: tell him not to bother trying to pull his credit reports from the credit bureaus).

He'll have to answer a series of prompts and multiple choice questions about different accounts he holds. This is the part that usually trips up anyone trying to do a bit of credit stalking on the down low. Once he's answered all the questions accurately, he can view and print his credit reports from all three credit bureaus.

Tell him his credit scores are not included in his free credit reports. If he wants his real FICO scores--the kind lenders use--he'll need to buy them from the Fair Isaac Corporation at MyFico.com.

And one more time, just in case anyone missed it, federal law prohibits credit stalking! No matter how curious you are, don't pull your boyfriend's or girlfriend's credit report unless you are merely helping them do it themselves!

Best of Luck,
Lee

Q & A: Should I File Bankruptcy Over Credit Card Debt?

QUESTION... I am delinquent on quite a few credit card accounts... I've been trying to keep up with the payments, but it has just gotten out of control. To the extent of over $50,000. I have one card that has contacted my mom, dad, sister and close friend. This is a jewelry store credit card that I made purchases on and never made a payment. I'm thinking of filing for bankruptcy... seeing as my only income right now is Social Security Disability. I have tried to keep current, but I just can't stay afloat any longer.

--Anonymous 

I'm not sure if your question is whether or not collectors can contact your family members, what rights you have if they do so or whether you should go ahead and file bankruptcy over this credit card debt, so I'll try to address all three. 

Debt Collectors Calling Family Members 

For starters, third party debt collector can only call your family members in an effort to track you down. They do not have the right to inform your loved ones about your debt or disclose any other sensitive information about your debt to a third party such as a family member, neighbor or employer. This excerpt from Section 804 of the Fair Debt Collection Practices Act which governs third-party collection agencies makes that abundantly clear: 

Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall -- 

(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;
(2) not state that such consumer owes any debt;
(3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;
(4) not communicate by post card;
(5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt

However, if the credit card companies you owe have not charged off the debt yet or have turned the debt over to an in-house collection agency (one owned by the creditor) the FDCPA does not apply. That doesn't mean that the behavior isn't illegal in your state--it very well may be--but it doesn't violate federal collection regulations. 

Potential for a Debt Collection Lawsuit

If a collector can't coerce you into making payments on your debt or--God forbid--turn over your banking information, it may file a debt collection lawsuit. If the company wins, the court grants it the right to forcibly make you pay by doing things like garnishing your paycheck, levying your bank accounts and putting liens on property you own. Not all debt collectors sue but, the more you owe, the higher your odds are of being at the receiving end of a lawsuit. Although your $50,000 debt is distributed among several credit cards, the amount is still high enough to put anyone at risk of a lawsuit. 

I do, however, have some good news. Because your sole income is Social Security disability you're safe from either garnishment or a bank levy. Social Security disability payments are one of the many government income sources that are protected from seizure by commercial creditors. If they threaten to sue you, letting them know that your sole income comes from Social Security and that you don't own any property (or do you?}may just be enough to make them back down. If a debtor is "judgment-proof," the collection agency is doing nothing but wasting time and money to pursue a debt they cannot collect. 

Don't be surprised if they sue anyway. Like I said before, $50,000 is nothing to scoff at. There is a statute of limitations for lawsuits and, as long as they win a court judgment before that statute of limitations expires, they can renew the judgment (you don't mention your state of residence, but judgments are often valid for about a decade) and wait for you to either get a job with actual wages they can garnish or start depositing non-exempt funds, such as monetary gifts, the proceeds from a small loan, tax refunds, etc, into your bank account for them to seize. So if you plan to come off Social Security disability at some point in the future, an old debt collector's judgment could come back to haunt you. 

Filing for Bankruptcy Over Credit Card Debt 

Anyone whose read this blog for any length of time can tell you how opposed I am to people in most situations to file for bankruptcy--especially people who are essentially judgment proof. Let me state for the record that I am no a bankruptcy attorney. Laws can and do change all the time, so if you decide bankruptcy is the best course of action you need to schedule a consultation with a licensed bankruptcy attorney in your area. 

That being said, if you meet your state's income requirements for filing Chapter 7, the whole process could be over in as little as three months and you could breathe easy without $50,000 in credit card debt hanging over your head every day. Although bankruptcy trashes your credit report for up to ten years, so does a judgment--and the judgment doesn't bar debt collectors from pursuing the debt any further like bankruptcy does. 

Bankruptcy has its drawbacks too. Depending on your state's exemptions, you may have to turn over some of your assets to the court when you file Chapter 7 bankruptcy. Although Chapter 13 lets debtors keep their assets provided they follow a strict repayment plan, individuals on Social Security often don't have enough disposable income to propose an acceptable repayment plan--making Chapter 7 their only bankruptcy option. 

A licensed bankruptcy attorney in your area can evaluate your situation and help you come up with the best possible course of action. You may even want to talk to a consumer law attorney in your state first. Not only is a consumer law attorney more likely to be unbiased about bankruptcy and help you explore your options objectively, he or she can also help you file a lawsuit if the collection agency that simply couldn't stop calling your family was violating the FDCPA by doing so. 

Best of Luck,

Lee