If you’re behind in paying your bills and you find yourself overwhelmed with phone calls and letters from collectors, consider these tips to resolve the issue of medical debt collection quickly.
Acknowledge the communication
A debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis and companies that buy delinquent debts and then try to collect them. Medical providers very often do not report medical bill payments to the credit agencies unless the bill is so far past due that it is reported and sent for collection. Knowing this, it’s better to recognize the medical debt communication up front to keep the bill off of your credit report.
Validate the debt
Every debt collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money and how to proceed if you don’t think you owe the money.
Ask for a copy of the original bill. Check for errors and to make sure the amount due is correct. Don’t understand the medical code? Contact the provider’s office or a third party medical advocate and ask them to explain the procedures listed. Check with your insurance provider to confirm they paid the claim in its entirety. You don’t want to pay more than you need to.
Settle your debt
If you can, contact the original provider to negotiate a lump sum payment for less than the full amount of the debt. If you can’t pay a lump sum, negotiate a payment plan. This is your chance to avoid interest payments tacked on by collectors. If it’s too late to work with the provider directly, offer the collector the same deal. Regardless of which party you agree to pay, make sure to get the payment terms in writing.
If you have an emergency fund use it. Alternately, consider an unsecured personal loan or a Home Equity Line of Credit if you have equity built up in your home; it’s often a lower rate than a personal loan.
It’s better to work with a collector as soon as you’re contacted to help put the issue to bed sooner rather than later.
Article provided by Local Government Federal Credit Union.
The advice provided is for informational purposes only. Contact a financial advisor for additional guidance.