Personal finance writers have their own theories about the various types of debt, but from a creditor’s perspective, they are all just debt. The procedures are not so different for collecting a debt whether it was “good debt,” such as money borrowed for the pursuit of an educational credential or to purchase an asset that will appreciate in value, or “bad debt” spent on luxury goods or entertainment that the borrower really could not afford. In discussions where debt-free people scold the majority of Americans for living beyond their means, medical bills is widely held to be innocent debt; no one chooses to get an illness or injury that requires expensive treatment, and almost all medical treatment is expected. If you are a creditor trying to collect a debt for a medical bill, you still need to follow the law, but the rules are not really stricter for you than they are for people trying to collect other kinds of debts. Contact a creditors’ rights attorney to find out more.
What Creditors Can Do to Collect Medical Debts
According to the law, medical debts are “accounts,” meaning that they are debts owed for services provided, in this case, doctor visits, hospital stays, X-rays, surgeries, and the like. Therefore, medical creditors have the following rights regarding the pursuit of unpaid debts:
- They may contact debtors by phone and speak directly to the debtor or a member of the debtor’s immediate family, as long as they state that any information they receive will be used to collect a debt
- They may refer the debt to a collection agency if it remains unpaid for several months
- They may go to court and ask for a garnishment of the debtor’s wages or bank account, but they may not take more than 25 percent of the debtor’s income
Why Do Medical Bills Have a Reputation for Being Different?
Although the procedures for collecting medical debts are similar to those for collecting other debts, the way they affect the borrower’s credit score is different. They are less likely to affect a borrower’s credit score, because healthcare providers do not usually report unpaid bills to credit bureaus. They do, however, refer unpaid bills to collection agencies, and the collection agencies then report them to the credit bureaus. Additionally, non-profit hospitals must offer patients the opportunity to enroll in a payment plan before they refer the debt to a collection agency. The rules about credit score reporting are changing, but these rules do not affect what a creditor can do to collect debts. You can still refer the debts to collection agencies, obtain judgments against the borrower and, if necessary, have the borrower’s bank account or paycheck garnished.
Let Us Help You Today
Unpaid medical debts are not a lost cause from a creditor’s perspective, but the best way to pursue them is through a lawyer, not through a third-party collection agency. Contact a skilled Alabama creditors’ rights attorney at Cloud Willis & Ellis for a consultation to find out how to get the money that debtors owe you.