Can I negotiate my medical debt?
August 1, 2012 1:50 PM   Subscribe

Can I negotiate my medical debt?

I was in an inpatient mental health treatment center two years ago, and when I got out my portion of the bill was $24,000 (I had insurance but they had a max yearly reimbursement for mental health). I went on a payment plan with the hospital and had paid it down to $12,000 by January of this year. The monthly payment was on autopay from my bank, and in January my bank was bought by another bank and my account changed hands. Unbeknownst to me the autopay stopped making payments on my hospital bill. I just realized this a few days ago when I got a collections letter for $12,000.

I called the hospital and they said that reminder letters should have been mailed to me when they stopped getting payments, but I sure didn't get any. They also said that my account has already been written off for tax purposes and that I should deal with the debt collector.

So, I don't want this account to go to collections because I'm currently in grad school and will be looking for jobs next year, and I know that companies pull credit reports. However, I don't have $12,000. I have a part-time job which mostly covers my living expenses and about $8,000 in savings. I don't want to put this on a credit card and then have high interest credit card debt, but if that's my only option I will. There's stuff all over the internet about people negotiating bills with credit collectors, but the ones I've seen are designed for bills that are already on credit reports - they basically pay the debt collector a percentage and they mark them as paid, or sometimes delete them. Are debt collectors ever willing to negotiate on bills that have not gone on one's credit report? If so, should I send them a letter offering $8,000 to settle the bill? Should I include the fact that I'm a student and don't have any substantial income? If not, are there any other options other than taking on credit card debt?

Thanks for any advice.
posted by anonymous to Work & Money (4 answers total) 2 users marked this as a favorite
When I was a student, there was some stupid business with the student health center not properly billing me for my visits, and the bills went into collections. The main part of the issue is that they hadn't mailed me (or my parents...I was on my parents' insurance) any statements even though they swore up and down that they had. I didn't know it was in collections until I started getting phone calls from a collections agency. (I assumed my parents had been getting the statements all along; found out later that my parents assumed it was all getting totaled into my student fees.)

I called the hospital in charge of the student health center and explained the issue. They told me they had mailed out every bill. I explained that either 1) they hadn't or 2) they had the wrong address on file, either way, no one in my family had received anything. They gave me some static. I kept asking to get transferred until I spoke with someone who wasn't a numbskull and eventually was able to get them to accept that yes, it was conceivable that I hadn't actually received any statements from them.

They pulled the amount out of collections and brought it back in house (I don't know how this works or if this is normal) and then after that my dad handled it since it was technically his name on all the bills.

All that is to say: call the hospital, explain the situation calmly and factually, and don't hang up until someone helps you. Based on everything I've ever heard, all hospital bills are negotiable.
posted by phunniemee at 1:59 PM on August 1, 2012 [1 favorite]

It's probably already on your credit report; have you checked it?

Some debt collectors will negotiate with you to pay a settlement sum or make a payment plan to cover the full amount - it varies. I've had a credit card pulled from collections back in-house, but I don't think this is typical.

You may want to check out some of the debt fora for more concrete advice but I think you should start making phone calls - starting with the hospital, escalate to the highest point you can, offering to pay. Then start with the collection agency. Be prepared for some incredulity or nonchalance at your non-receipt of reminder letters and your not knowing that your bank account wasn't being debited for what you owed.
posted by sm1tten at 2:42 PM on August 1, 2012

On the bright side, since it's medical debt, once its paid you can get it removed from your credit report, so at least you don't have to worry about that in the long term, no matter how intransigent the debt collector is. I would try some more with the hospital. Make them realize that it was their error in failing to send out notices that caused this to go into collections and they may take it back.

You can try to negotiate with the collection agency, but they will very likely do many scummy things that will make you wish you hadn't. This includes, by the way, fraudulently debiting money from your checking account. Do not send them a check, only money orders.

You'll find lots of advice over at CreditBoards. Lots of people over there have gone through what you're going through. At one point there was, and probably still is, a subforum dedicated to medical collections.
posted by wierdo at 4:31 PM on August 1, 2012

Medical expenses, if they do end up on your credit report, and a potential employer sees them, are generally not viewed in the same way as other bad debts. The specific expenses are not identified, but it is clear that they are health-related. It's unlikely that these will count against you. Most employers understand the state of our health-care system. Medical expenses are just not the same as debts to a utility or a department store.
posted by mlk at 5:43 AM on August 2, 2012

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