help me negotiate with collections
March 30, 2011 12:31 PM   Subscribe

How can I negotiate with a collection agency? My insurance (unknown to me) refused to pay something, I have a bill, I can afford to pay 2/3 but am unsure how to negotiate this.

This is partly my fault, I admit. I had an exciting medical event with a welter of bills and paid them--or so I thought. I did not realize that something had been billed incorrectly and my insurance was refusing to pay it (I know that this is something my insurance was supposed to cover and has covered in the past.)

Now it's nine months later and the thing has gone to collections--which was a total surprise! I think it's too late to dispute it with the insurance company.

I'd like to pay this off in one fell swoop, but I can only afford to pay about 2/3. I've heard of people negotiating collection agencies down by offering to pay cash on the barrelhead and I would like to do this. Specific questions:

1. Do I lowball my initial offer, ie offering 1/2 cash and letting myself get negotiated up?

2. If I give them my credit card number to pay right then, how can I guarantee that they won't charge the whole thing?

3. How can I guarantee that the debt will be discharged? What if they say they'll accept 2/3 but then start dunning me for the remaining 1/3?

4. What language should I use to start this process?

I would really like to get this taken care of--I don't like being in debt this way. I absolutely do not want to pay the whole thing--my partner was laid off and even a monthly payment plan will be a strain. I'd rather use the cash I have to get it taken care of.

posted by anonymous to Work & Money (7 answers total) 1 user marked this as a favorite
It can be pull back from Collections. I would talk to the insurance company first to ask the claim to be reprocessed; have the insurance company contact original creditor/provider to explain claim is being reprocessed, provider will have to notify collections agency so the bill is placed on hold until the claim is fixed and paid. If you or your employer have an insurance agent, get them to do it. It is a common practice.
posted by 3dd at 12:47 PM on March 30, 2011

Now it's nine months later and the thing has gone to collections--which was a total surprise! I think it's too late to dispute it with the insurance company.

Not necessarily. Don't let the insurance company convince you it's "too late." Nine months is really not much time at all. I would first deal with the insurance company, and let them know courteously but firmly that you expect it to be paid.

If you can't get the insurance company to pay it, I would super-lowball the provider (offer 20% or 25%) and then let them haggle you up. Nothing fancy about how to do this: just say, "I can't afford that amount, I expected my insurance to pay it ... will you settle it with me for x?"
posted by jayder at 12:47 PM on March 30, 2011

I asked a very similar question recently. Most of the answers were not very helpful, but IndigoRain's was and in fact what ended up happening is that the collections agency was not able to negotiate a lower rate. I ended up paying my bill (only about $150) in full. *sigh*

However, I did start by offering about 1/3. I used language from a sample letter I found at a credit forum; it went something like this:

Thank you for sending me a copy of the proof of debt after my initial phone call with your representative.

I do not concur that I am liable for this debt. [brief explanation of circumstances].

However, I am willing to settle this debt with you.

I propose to pay $50 to settle this debt in full. In addition, any reference to the debt will be removed from my credit reports.

You may consent to this by signing and returning this letter. I will send a money order in the amount of $50 within 15 days of receiving your consent.

You might have more luck, but from what IndigoRain said, the agency may not have the ability to negotiate a lower payoff at this stage. Still, I'd say it's worth a try.

Some useful info I got from AskMe and from cruising credit forums: Do not sign your letters, because unscrupulous credit agencies will sometimes migrate a signature to a different document. Do not write a check or give credit card information; make payments with money orders so that they can't charge more than you've agreed upon. I suspect this is less relevant with medical collections than with other kinds, but it made sense to me to be on the safe side. Most people say that even if the debt is yours, you should not admit that in writing, and sample letters usually include some version of, "This is not an acknowledgement of indebtedness."

To guarantee the debt will be discharged, you don't send them money until they've signed your agreement. Then if anyone tries to come after you for the balance, you can send them a copy of the agreement stating that the debt is discharged in full with your payment of $X.

I hope this helps, and that you have better luck negotiating a reduction than I did.
posted by not that girl at 12:48 PM on March 30, 2011 [1 favorite]

Oh, and if you haven't, I agree that you should start with your insurance company to see if they can get it back from collections, and have the provider re-bill it. I've had medical bills erroneously sent to collections two or three other times, and this was the only time I was not able to get my insurance company to bring it back from collections. However, they will always tell you at first that once it goes to collections there's nothing they can do. In each case where they were able to, though, it had been a matter of days or weeks, not months, and that may have made a difference. Still, worth a try if you haven't done it yet. Be persistent and ask to speak to supervisors.
posted by not that girl at 12:53 PM on March 30, 2011 [1 favorite]

When I say "insurance company," I mean the provider getting it back from collections and re-billing it. Sorry for typing while distracted.
posted by not that girl at 12:56 PM on March 30, 2011

It is not too late, I bet - most insurance companies have a timely filing period of at least 12 months, which means that they will accept claims up to 12 months from the date of service. some are even longer. So go back to your insurance company and ask them what needs to happen to get them to reprocess the claim. You might need to do some coordinating between them and your provider, but it is entirely possible to appeal this denial of coverage. Especially if it's a service they normally do cover. And agreed with this, from above: Be persistent and ask to speak to supervisors. Make sure you point out to your insurance company that this was due to a claims processing error on their part.
posted by DrGirlfriend at 1:53 PM on March 30, 2011

IANYL. I recently helped my SO with the same kind of issue where a covered procedure was coded incorrectly by the medical office billing staff--communication fell off, and the matter was sent to collections. I wrote a few letters to the medical office, insurance carrier, and collectors and told them that the procedure was a covered procedure. I told the medical office that they coded it incorrectly and demanded they re-code it and re-submit to the insurance carrier--who then gladly paid it.

If it's a covered procedure and it's billed incorrectly, that is the place to start. Have the bill corrected and send it to the carrier. Tell the collection agents that it's an insured claim, thank them for bringing it to your attention, and ask them to give you 90 days to try to have the bill corrected, resubmitted to the insurance carrier and to have the carrier process the claim (again). Do this in writing, and keep copies via mail.

This was for a bill that was about 18 months old. YMMV depending on state, obviously, but 9 months should probably not be too late. Just make sure you follow through. Make sure you keep the collection agency in the loop whenever there is any activity so they know you are earnestly endeavoring to get their masters paid.
posted by Hylas at 3:00 PM on March 30, 2011

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