A medical bill was sent to collections. What do I do?
October 21, 2013 5:32 PM   Subscribe

A medical bill was sent to collections. I am 25 and have no credit and no money. What do I do? Is it even possible to fix my credit?

I was in the hospital earlier this year and several bills resulted from this that insurance either did not exist for or did not cover. I paid all of them off but one, which I have $100 left on, and one that my grandmother was paying. My grandmother died two months ago, and they sent it to a collections agency. I got an intermediary letter saying the bill was due but I was afraid to call the hospital and they never sent a final warning or gave me a phone call (which the other bills did). I got the letter from the collections agency in the mail today. The letter says it is listed as delinquent. I do not know if it has been reported to any credit bureau yet. It should go without saying that I have nowhere near the amount it is for ($800 or so at this point) and cannot afford to make even a small monthly payment if I am to make rent this month.

What can I do? I have no idea how this works. Do I call the hospital? Do I call the collection agency? What do I say? What about my credit? I have never had a credit card or done anything to improve my credit and am terrified of it. I literally have no idea how it works and the letter is worded like a lawyer telling me anything I say can be used against me. Plus I don't have any money because I still don't know if I can make rent and I am terrified.
posted by dekathelon to Work & Money (13 answers total) 3 users marked this as a favorite
Response by poster: (update: I just checked my credit report and it says my score is in the good range. Apparently my mother had opened credit cards in my name and didn't tell me, and there are about 100 on-time payments for those. This has not showed up yet but I don't know when or if it will.)
posted by dekathelon at 5:38 PM on October 21, 2013

Call them up, explain the situation, offer to pay $5. a month. Or apply for Medicaid which, in some cases, can pay old bills. Why aren't you covered on your mom's insurance? You're under 26, and, presumably, in the US.

Why does your mother have credit cards in your name, and what is she buying with them? You need to find out! Of course, she may have just added you to hers.

Stop panicking, it's not a big deal. Just call the various places and sort it out.
posted by mareli at 5:42 PM on October 21, 2013

Don't panic. What you have there is a demand letter, and it's written in a frightening way on purpose.

You can always negotiate with debt collectors. You can find tips on how to make them validate the debt in the first place. Even though you're pretty sure where the debt comes from, you can give them a chance to screw up by not having the paperwork to show the origin of the debt.

The first thing you do is find out if your grandmother guaranteed payment to the hospital or if you did. It's possible you don't owe the hospital at all, but that she did.

You can also almost always find a *small* amount you can pay per month. They won't accept it right away, so be ready with a very small offer and a slightly higher offer.

The idea that your mother has credit accounts in your name is a red flag to me... at least she pays them. Once you get the hospital bills sorted out, getting those accounts closed or under your sole control is very important.
posted by Kakkerlak at 5:47 PM on October 21, 2013 [3 favorites]

I'd cancel the credit cards your mom opened in your name, put a fraud alert on your credit report.

Call each agency and make payment arrangements. For the remainder of your bill.

Sign up for insurance, you may be eligible for subsidized rates.
posted by Ruthless Bunny at 6:11 PM on October 21, 2013

Response by poster: (uh, just to clarify, the credit cards were so that she could pass on her credit and I could have a good credit foundation, not fraud on her part. this has been going on for a year with everything on time and I really have no reason to distrust her. of course all of this might be moot with this bill but who even knows. also, past questions say never talk to collections agencies on the phone as they will screw you over, talk to the source, is this true?)
posted by dekathelon at 6:13 PM on October 21, 2013

"the credit cards were so that she could pass on her credit and I could have a good credit foundation"

It doesn't work that way. If the cards are in your name and she opened the accounts using your name and SSN, it's fraud. If she gets hit by a bus tomorrow, you will be the person who has to pay those bills.

Call the collections agency, do NOT give them any bank account information either over the phone or online. Do not write them a letter. You can offer to pay the bill over time, you can offer to settle for a reasonable amount or you can blow it off, which will cause your credit score to drop.

Avoiding unpleasant things is something everyone does, but it's not a good plan as you become an adult. Someday you may want to work for some company that does credit checks, and you'll be screwed.
posted by Ideefixe at 6:46 PM on October 21, 2013 [1 favorite]

Can she use the cards she's opened in your name to pay off the balance of the bill? You'd have to pay off the credit card, but maybe she could help with that, too, until you're back on your feet a little.
posted by ThePinkSuperhero at 6:53 PM on October 21, 2013 [4 favorites]

I was in a situation similar to yours about four years ago, and just ignored it because I could not afford to pay at the time. The bad mark on my credit report dragged my score down by about 80-100 points, and this year I finally needed to fix my credit to buy a house. I followed this HIPAA letter writing program exactly as written and managed to get the derogatory mark deleted off my report for all three credit reporting agencies. This method required that I pay my bill in full to the original hospital, and then write literally about 20 letters freehand, but it did work, and my credit score/report is now spotless. I don't know if the laws will change, but right now this totally works if you follow it exactly and it allows one to fix their credit if the only derogatory marks are medical accounts.
posted by 2ghouls at 7:04 PM on October 21, 2013 [4 favorites]

I got a delinquent medical bill once when I had moved to a new place, updated my address with my doctor, but the lab they outsourced their testing to was apparently never informed and my bill never got forwarded.

Do not settle with the collections people. Ask them who the original creditor was, get contact info and call them to arrange payment. When you speak to collections, get the name of the person you spoke with and write it down. Tell them you will settle with the original creditor.

The lab people were super understanding because this happens a lot.
posted by Schielisque at 7:07 PM on October 21, 2013

I worry about the idea of putting this on a credit card in your name, because you suggest that your tendency is to stick your head in the ground about this stuff because you're frightened of it, and when it's a medical bill held by people who want to work with you to get the issue resolved, that's one thing, but when it's a credit card company charging you 18% interest for each month you ignore it and who doesn't care about whether you go bankrupt or not, that will be quite different.

What about borrowing a small amount from your mother to start paying on the bill, instead of putting yourself in debt to a credit card company?
posted by treehorn+bunny at 11:16 PM on October 21, 2013 [1 favorite]

>Do not settle with the collections people. Ask them who the original creditor was, get contact info and call them to arrange payment. When you speak to collections, get the name of the person you spoke with and write it down. Tell them you will settle with the original creditor.

You can require proof of the debt but you cannot do this. The original creditor is under contract to have the collection agency handle it.

Good news: sometimes, creditors reviewing a credit history when considering a new loan will disregard "medical debt" because so many people end up in the OP's situation.

And Deka is right. Under the Affordable Care Act, you can be on a parent's policy until age 26 - if the parent has insurance.
posted by megatherium at 4:03 AM on October 22, 2013

Schielisque and 2ghouls are correct, you want to use the HIPAA letter writing program by WhyChat, and pay the original creditor. You have no requirement to pay or settle with a collections agency instead of the original creditor, including if there's been a mistake made by the original creditor in billing you.

I was charged $1000 and sent to collections for a bill I had already paid. It didn't matter that the company outsourced it to a collection agency; I worked it out with the original company, not the collection agency. The collection agency doesn't care whether there's a mistake made: they buy these debts for pennies on the dollars so it's in their interest not to right a wrong.

If I had paid the collection agency, they would have updated the payment on my credit reports, unfairly dinging my credit.
posted by mitschlag at 7:37 AM on October 22, 2013

Response by poster: Update: I called the hospital the other day and was told they can't help anymore and to call collections. The collections agency said they are non-reporting (which checks out as nothing has happened on my credit report yet) and I made a (small) payment the other day.

Re: the cards, it was apparently something a financial adviser told her to do. Given that there are at least a hundred on time payments and given what I know of her in general I don't really think this is an issue right now, certainly not one I can deal with at the moment.
posted by dekathelon at 11:04 AM on October 25, 2013

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