What Happens to Unpaid Medical Bills?

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The sticker shock of your hospital tab just adds insult to injury. Even with health insurance, you may get stung with a hefty bill once the hospital factors in co-pays, deductibles and co-insurance costs. Whether you had surgery or just a routine exam, someone has to pay the bill. When your health insurance doesn't cover everything, the bill is sent to you for satisfaction. When you cannot pay the bill, you must make other arrangements -- or else you could face debt collection, civil action and forced payment.

In-House Collection

Depending on the medical facility, your creditor may have an in-house collection department that deals with unpaid medical bills. Many medical offices wait between three and six months before beginning the collections process, although there is no definite time frame. In fact, your bill could be sent to collections while you are making payments on it. After your first due date comes and goes, expect to receive telephone calls and follow-up, past-due bills. After repeated unsuccessful attempts, the debt is sold off or transferred for collection.

Collection Agencies

Smaller facilities often contract or sell the debt to a debt-collection agency. Debt collectors are aggressive in pursuing past-due debts, as the company does not get paid unless you pay the bill. Expect phone calls, past-due letters and skip tracing -- calling your family, employer and neighbors -- all in an attempt to locate and collect money. Debt-collection agencies input a collection account on your credit report, which drops your credit score. According to Experian, the account stays on your report for seven years from the date of entry and may significantly lower your credit score -- by up to 125 points. Paying the bill after entry on your credit report does not remove or improve the total effect on your score.

Civil Action

When significant amounts are on the line -- anywhere from several hundred to thousands of dollars -- expect a summons at your door. Your creditors only have a specified amount of time to collect your debt. The statute of limitations on debt varies by state and is set by state statute. Many medical facilities hire attorneys and pursue civil action in court. When you are sued, you can choose to go to court and fight the bill. If you lose, the judge issues a judgment against you. The medical facility may pursue wage garnishment, a bank levy or a property lien to force payment depending on your particular situation. You also receive a public-record entry on your credit report that stays for seven years and adversely affects your credit score.

Fair Debt Collections Practices Act

Debt collection agencies must follow the Fair Debt Collections Practices Act on collecting past-due debts. After receiving written notification of the debt, you have 30 days to dispute the debt. You may also request a cease and desist of all telephone contact. You should send all communications with the collection agency via certified mail with return receipt requested: You need proof that you exercised your right to verify the debt and stop contact.


Unpaid medical bills are subject to late fees each month. Once the bill goes to collection, you could see interest charges tacked on to your total bill. Make sure to review the bill closely to ensure that you're responsible for all the charges. Talk to your insurance company to find out if anything was denied and the reason for the denial. Finally, negotiate with the billing department. You may be able to eliminate some of the charges by talking with the company. Explain your hardship and put your bill on a monthly payment plan. Ignoring the problem won't make it go away and creditors are more likely to negotiate at the onset than after months of no contact.