If you are facing medical debt collection, do not ignore it. Your hospital or other provider may be chasing you for the money, or they may have assigned or sold your debt, often at a steep discount off face value, even pennies on the dollar, to a professional debt collectorif you have not paid your bill within three to six months after initial presentation. Old debt like this is not worth much so in a way your leverage improves once the professional debt collector starts calling. They have likely given up on getting everything that is billed to you, so you have fresh opportunities to negotiate to pay much less than the full tab as your dispute moves into this new phase. If your debt has been sold to a third party collector who is now pursuing you for payment, realize that there is no longer any use appealing to your medical provider for a discount or other relief. Find out who actually owns your debt once third party collectors begin contacting you. A debt buyer who paid only two to three cents on the dollar to purchase your hospital debt would be happy to settle for a small fraction of what you are deemed to owe, say five to ten cents on the dollar in this hypothetical ,as he would still make a profit. Reaching agreement on that steeply discounted price should be your goal in negotiating with the professional debt collector. You might be able to get an even better deal if you agree to pay in a lump sum rather than an installment plan.

Several states notably Massachusetts now prohibit the reporting of medical debt by credit rating agencies, so check with your state attorney general’s office to learn whether you have that protection. Debt collectors however will often threaten to ruin your credit rating by reporting your alleged delinquency to the credit rating agencies even if such a ban exists in your state. The debt collection industry has been guilty of so much abuse and deception that it has been reined in by the federal law known as the Fair Debt Collections Act. The act allows you to dispute a debt , but you must do so in writing within 30 days of being contacted by the debt collector. If you fail to do so within that deadline, you are legally deemed to waive any right to dispute the debt. Therefore you should not ignore those collection calls and letters. Be sure to send your letter disputing the debt to the debt collector by certified mail return receipt requested so that you have proof of its delivery within the 30 day deadline.

The Fair Debt Collection Act also requires the debt collector to provide the debtor with verification of the debt. That is something every patient should demand. It may be impossible for the debt collector who bought your debt from your hospital or other medical provider to produce this information, because many of the debts they pursue are so old , and /or may have been bought and sold so many times ,that they simply cannot produce it. It will be labor and time intensive in any event for the debt collector to track down the documentation you are demanding from the doctors and hospitals, who have a general reputation for disorganized record keeping. In such cases the debt collector may simply throw up his hands and walk away. Even if he persists, you now have leverage in negotiating a nuisance value settlement once your pursuing collector realizes that he lacks the debt verification required for any legal enforcement action against you. Lacking such ability to win a case in the court system, he cannot garnish your wages nor lien your house, provided of course that you respond defensively and timely by filing an answer in court if he does attempt to make a formal complaint for such action there.

A sample debt dispute letter ,which also includes a demand for debt verification, is included in the Resources section of this website, You can tailor it to the facts of your situation. Again, make sure to send this letter to your debt collector at his address of record as shown on his written notice of demand within 30 days of your receipt of the first such demand you receive from him so you can preserve your rights to contest the debt further if necessary.

Negotiating a compromise debt settlement

If you do decide ,after all your research into fair pricing as outlined above, to negotiate a deal for a discounted payment with the debt collector for an amount that reflects what you believe you owe, beware of committing to any installment pay plan that you may not be able to keep.Aim ideally for paying in total only somewhere between 5% to 15% of what is being demanded. If you can do pay it in a lumpsum, seek an additional discount for sparing your collector the time and energy involved in monitoring your compliance with an installment payment plan. It is important to understand at the outset of any negotiation that if you agree to an installment payment plan and do not abide by it, missing even one payment, your account goes into default. That means you could be deemed to owe not the discounted negotiated amount that you finally agreed to pay in installments, but instead the entire and probably exorbitant amount that the debt collector was originally seeking before you bargained it down to that lesser sum.You get only one chance to make a deal, so make sure that it is a deal you can afford . Do not be bullied by collectors who press you to sign on to a larger monthly payment than you can afford. It is safer to drag out a lot of small payments over time if you are on a tight budget. You can always double up on small monthly payments and accelerate your payment schedule if you come into more money. Just make sure there is zero interest, or a low enough interest rate that your debt will not balloon over time.

Above all, do not allow the debt collector to impose any sense of shame on you as leverage in negotiating a settlement. You are not to blame for getting sick. It is not your fault that our society has allowed profiteers to take over our health industry and harm you with price gouging. It is a moral travesty that we have corporations in our predatory healthcare and prescription drug industry raking in billions of dollars each year , and hospital and health insurance executives and pharmacy benefit managers and insurance brokers raking in millions in annual compensation , while ordinary Americans get send to collections. In every other developed country health care is recognized as a public good to which everyone should have access without reference to their ability to pay.