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Drowning in medical debt? Know your rights in collections

As we discussed in our last post, more Americans file for consumer bankruptcy over insurmountable medical bills than any other reason. Of course, many people who can’t afford to pay their medical bills don’t end up filing for bankruptcy, which means there are a lot of people financially suffering over health care debt.

According to the Centers for Disease Control and Prevention, nearly 20 percent of all Americans were facing medical bills they couldn’t pay last year -- that’s 54 million people. A health care advocacy foundation called the Commonwealth Fund found that 1 in every 5 American adults was contacted by a collection agency last year about overdue medical bills.

Unfortunately, the Commonwealth Fund reports that a surprising number of those bills aren’t even real -- they’re the result of medical billing errors. Seven million people reported having inaccurate or false bills sent into collections in 2012. The American Medical Association says that, on average, of 7.1 percent of all bills sent by private health insurers are inaccurate.

Even when the bill is truly owed, patients are often unaware that they owe them. The Los Angeles Times recently reported that patients often don’t receive a bill at all before their accounts are sent to collection agencies.

Creditor harassment is hard enough to deal with when your health is good. For sick and injured people, the stress of dealing with collections often exacerbates the health issue, but even if not, it’s hard to tolerate.

What rights do you have if you have unmanageable medical debt and are facing creditor harassment? Both federal and California law give you the right to be sent a full written verification of any debt you allegedly owe and, once you request that, creditors and collection agencies must stop their collection efforts until you have received it.

Don’t procrastinate. If you’re not sure the charges are correct, you may have only 30 days to dispute it. Contact your medical provider right away and ask them to stop collections until it is resolved. If you’ve already paid the bill but you’re still receiving collection calls, you still have the right to demand a verification of the debt. When you receive it, match it up with a receipt, a canceled check or a credit card statement and send that in to prove your payment.

If your medical debt is insurmountable or collection agencies won’t see reason, consider discussing it with a bankruptcy attorney. Both Chapter 7 and Chapter 13 offer relief from medical debt in almost all cases, and a bankruptcy lawyer can also explain what legal options are available outside bankruptcy.

Source: Los Angeles Times, “How to stop medical bills from going to a collection agency,” Lisa Zamosky, July 5, 2013

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