What Happens To Medical Bills That Go To Collections?

If you have failed to pay your medical bills, you might be wondering what happens to unpaid medical bills that are sent to collections. This post provides you with everything you need to know as to medical bills that are sent to collections.

What Happens to Medical Bills That Are Sent to Collections?

If your unpaid medical bills are sent to collections, the collection agency that purchased the debt will attempt to collect the debt from you. If that fails, the collection agency will report the unpaid debt to the credit reporting bureaus. If the debt is reported to the credit bureaus, it will likely appear on your credit report, lowering your credit score.

A single collection account can lower your credit score by 100 or more points. The higher your credit score, the more your credit score will drop. If a collection account appears on your credit report, it will remain on there for 7 years from the date you missed your first payment on your medical debt.

After the 7 year period, the collection account will be automatically removed from your credit report. If the collection account is not removed after the 7 year period, you can file a dispute with the credit bureau showing the account to have it removed from your credit report.

You should keep in mind that paying off a collection account after it appears on your credit report will not remove it from your credit report. In fact, a paid and unpaid collection account have the same negative impact on your credit score. The only difference is that paying it will mark the account as paid.

The only way to remove a collection account is to successfully dispute it or negotiate with the collection agency to remove the collection account in exchange for payment of the outstanding amount that's due.

So, if you have received a collection notice from a collection agency, it's best not to ignore it because if the outstanding debt remains unpaid, it will likely result in a collection account being added to your credit report.

Do Medical Bills That Are Sent To Collections Affect Your Credit Score?

Medical bills that are sent to collection could affect your credit score if the collection agency adds a collection account to your credit report. Again, a collection account can cause a significant drop in your credit score. So, it's best to negotiate with a collection agency before they report the debt to the credit reporting bureaus.

A single collection account can cause your credit score to drop by 100 or more points. The better your credit score, the bigger the drop will be.

If your past-due medical bills still have not been sent to collections, it's best to contact your health care provider and ask them about options to pay off the money that's due.

Some providers may be willing to assist you, providing you with huge discounts if you agree to pay the balance in full. If you cannot pay the balance in full, you should inquire about payment plans. Many healthcare providers will be willing to allow you to pay for medical care in installments, making it manageable for you to pay off medical debt.

What Should You Do If Past Due Medical Bills Are Sent To Collections?

If your past-due medical debt is sent to collections, the first thing that you should do is to contact the collection agency and try to stop them from reporting the collection account to the credit bureaus. You can do so by paying off the medical bills or asking to be placed on a payment plan.

If you owe a large amount of money, you should try negotiating with the collection agency. Collection agencies often purchase medical debt for cents on the dollar, so they have a lot of wiggle room when it comes to negotiating the amount you owe them.

If a collection account has already been added to your credit report, one tactic that you can use is to offer them payment in exchange for the removal of the collection account from your credit report. Some collection agencies will be willing to work with you by accepting payment in exchange for the removal of the collection account from your credit report.

If you successfully negotiated the removal of the collection account in exchange for payment, you should review a copy of your credit report to verify whether the account has been removed from your credit report.

If the account is not removed, you should file a dispute with the credit reporting bureaus to have it removed from your credit report.

When you file a dispute, provide the credit bureaus with evidence that you've negotiated the removal of the collection account from your credit report in exchange for payment. The dispute process could take up to 30 days, but oftentimes it's completed within just a few days.

How Long Does a Collection Account For Medical Bills Remain On Your Credit Report?

A collection account that appears on your credit report as a result of failing to pay medical bills will remain on your credit report for 7 years from the date you missed your medical bill payment. After the 7 year period, the collection account will automatically be removed from your credit report. If you want to remove a collection account from your credit report, you should file a dispute with the credit reporting bureau to have it removed. That said, to successfully dispute a collection account, the account must contain an error or have been added to your credit report in error. Valid collection accounts cannot be removed from your credit report via the dispute process.

How To Improve Your Credit After Having a Collection Account Added To Your Credit Report?

If you've had a collection account added to your credit report as a result of unpaid medical bills, here are some things that you should do to improve your credit score.

1. Make Payments On Your Accounts

If you want to improve your credit after having a collections account added to your credit, you should make all of your credit card and loan payments on time. Your payment history accounts for 35% of your credit score, so making timely payments will provide a nice boost to your credit score. Missing even a single payment on a credit card or loan can significantly lower your credit score. So, make sure to make your payments on time to avoid damage to your credit.

2. Reduce the Balances On Your Credit Cards

Another way to quickly improve your credit is to pay down the balances on your credit cards. Your credit utilization (how much of your available credit you're using) accounts for 30% of your credit score. The lower your credit utilization, the better your credit score will be. So, paying down your credit card balances can improve your credit for this reason.

3. Keep Old Accounts Open

Your average account age makes up 15% of your credit score. The older your accounts, the better your credit score will be. So, keeping old accounts open even if you rarely use them, can be a great way to improve your credit.

4. Refrain From Submitting Too Many Credit Applications Within a Short Period of Time

To improve your credit, you should refrain from submitting too many credit card and loan applications within a short period of time. This is so because new credit applications make up 10% of your credit score. Every time you apply for a credit card or loan, a hard inquiry is placed on your credit report when the lender reviews your credit report. The fewer the hard inquiries on your credit report, the better this factor impacts your credit score.

Frequently Asked Questions (FAQs)

1. What happens if medical bills go to collections?

If your unpaid medical bills go to collections, a collection agency will attempt to collect the debt from you. If the collection agency fails to do so, it will add a collection account to your credit report, significantly lowering your credit score. A single collection account that's added to your credit report can lower your credit score by 100 or more points.

2. What Happens to Medical Bills That Are Sent to Collections?

Medical bills that are sent to collections can result in a collection account being added to your credit report. A collection account can significantly lower your credit score. Also, the collection agency will likely relentlessly call you and send you letter trying to collect the outstanding medical bill debt from you.

4. Do Medical Bills in Collections Every Go Away?

If unpaid medical bills result in a collection account being added to your credit report, the collection account will remain on your credit report for 7 years from the date you failed to pay your medical bills. After the 7 year period, the collections account will automatically be removed from your credit report. Paying a collection account will not remove it from your credit report.

4. How do you get medical bills out of collections?

You can usually get bills out of collections by paying them or paying your healthcare provider. That said, if a collection account has been added to your credit report, paying the collection account will not remove it from your credit report. If there is a collection account, you should negotiate with the collection agency to pay in exchange for the removal of the collection account from your credit report.


Can a Collection Agency Charge More Than the Original Debt?

If your debt has been sold by your creditor to a collection agency, you might be wondering whether a collection agency can charge more than the original debt that you owe? We will answer this question in more detail below.

Can a Collection Agency Charge More Than Original Debt?

Yes, a collection agency can charge more than the original debt that you owe them, however, the collection agency can only charge you fees and interest that were set forth in the original agreement between you and your lender or creditor. They cannot charge you more fees than initially agreed upon between you and your lender.

This is so because there are State and Federal Laws in place, such as the FDCPA (Fair Debt Collection Practices Act) that dictate that a collection agency can only charge you interest and fees listed in the terms of the original agreement between you and your lender. So, if a debt collector has charge you fees that are not listed in your original agreement, you should contact the collection agency to understand exactly what fees and interest they're charging you. If they are charging you more than what was initially agreed upon, you should be aware that you have the option of contacting your State's Attorney General to inform them that the collection agency is violating the law by charging you unlawful fees.

For example, if you agreed to pay a $50 late fee for every month that you're late on making your credit card payment, a collection agency that purchases the debt cannot charge you more than that fee. If they are, you can file a complaint against them with your State's Attorney General office and they may be able to provide you with the legal options that you have against your debt collector.

When Does a Collection Agency Get Involved?

Typically if you default on a debt, such as credit card debt, auto loan, or any other type of debt, your creditor may sell the debt to a collection agency for less than what you owe. The collection agency then proceeds to attempt to collect the debt from you. When collecting the debt, many collection agencies charge additional fees and interest on the amount that's due. Some people have reported a doubling of the amount that they owe.

As mentioned previously, you should keep in mind that debt collectors are only able to collect money you agreed to pay under the terms of your agreement, so if your agreement states that you're liable for interest and fees, there is nothing stopping debt collectors from collecting such interest and fees. However, some debt collectors go above what they can charge you, so it's important that you're aware of what they can charge you.

Can a Collection Agency Charge You Interest?

Debt collectors can only charge you interest that you agreed upon with in your original agreement, meaning they cannot charge you more than what was initially agreed upon. So, if your contract included a low interest rate, a collection agency cannot charge you more than that interest rate. The same applies to late fees. If your agreement did not include a late fee, you cannot be charged a late fee. This prevents collection agencies from being punitive, charging you fees and interest simply because you failed to answer their phone calls. For example, if you have an unpaid medical bill where you did not agree to be charged late fees or interest in the event that you did not pay, the collection agency cannot charge you more than the dollar amount of the bill.

Can More Than One Collection Agency Report the Same Debt?

When you debt is sold to a collection agency, your debt can be sold to a collection agency. When your debt is sold to a collection agency, both the original creditor and the collection agency can report the unpaid debt on your credit report. The original lender will report that the account has been paid late and/or charged off, and the collection agency can add a collections account to your credit report, significantly lowering your credit score.

That said, can more than one collection agency report the same debt?

Oftentimes a collection agency may attempt to collect the unpaid debt for a certain amount of time, after that, the collection agency may sell the debt to a different collection agency, and this is totally normal and permitted.

However, if a collection agency sells a debt to another collection agency, you can end up with two collections accounts for the same debt. If this happens to you because your debt was sold from one debt collector to another, you should dispute the collection account that was previously report to have it removed from your credit report. The reason for your dispute should be labeled as the debt collector no longer has collection authority on the account. Provide any evidence that you may have and the debt should be removed from your credit report by the credit reporting bureau.

However, you should first contact the previous debt collector and explain your situation to them. If they agree to remove the collection account, then good you're done. However, some will refuse to remove it, and so you will have to dispute it with the credit reporting bureau reporting the collection account.

After you file the dispute, the debt collection agency will have to validate the debt and show that it's an active debt. Of course, since it sold the debt and transferred it to a different collection agency, it will not be able to do so, and the credit reporting bureau will remove the collection account from your credit report. In the event that the credit reporting bureau refuses to remove it from your credit report, you have the option of contacting the Consumer Financial Protection Bureau and explaining your situation to them.

The Bottom Line - Collection Agency Charging More Than Original Debt

At this point, you should know that although a collection agency or debt collector can charge you more than the amount of money you owed, they are limited to charging the interest and fees in your original agreement if such terms were included. If no interest and late fees were included, they cannot charge you such fees. If you have any general questions or comments, please feel free to leave them in the comments section below.