Pay medical bill before debt goes into collections


Credit Smart
Credit Smart columnist Susan C. Keating
Susan C. Keating is the president and chief executive officer of the National Foundation for Credit Counseling. Prior to joining the NFCC, Keating spent 29 years in financial services. She was the highest ranking female CEO of a U.S. bank holding company, serving as president and chief executive of Allfirst Financial Inc., the largest U.S. holding of AIB Group. She currently serves on Bank of America's National Consumer Advisory Council and is a board member of the Council on Accreditation. Keating also participates in the Financial Regulation Reform Collaborative, a nonpartisan group committed to finding solutions for reforming financial services regulation.

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Dear Credit Smart,
I  have a medical bill that was sent to collection without any notification first. The collection agency says it hasn't reported to credit bureaus yet. If I pay the full amount during the next 30 days, I was told it will not be reported. Is it possible that it has not been reported? I am willing to pay the full amount. I just want to make sure they don’t report it, but they will not send me a letter beforehand only a letter of paid in full after they receive payment. Also, is it wise to pay with bank billing rather than check or money order? – Gloria


Dear Gloria,
Having a medical debt go to collections without notification is not all that unusual due to the complex nature of medical billing. I think it is certainly possible that the collection agency has not reported your debt to the credit bureaus yet; 30 days is basically the standard when it comes to reporting. The collection agency’s goal is first and foremost to collect the debt and they know that consumers are anxious to keep bad marks off of their credit reports; unfortunately, it may feel like undue pressure to make a quick decision.  If that is the case, I want my readers to know that every consumer has the right to ask for verification of any past due debts before agreeing to any payment arrangements.

However, it seems that you don’t dispute that you owe the debt or the amount. Therefore, I would suggest that you go ahead and pay it now in full if you can. I would not suggest, however, that you give your banking information to the creditor to draft the money directly from your account. Instead, pay by check or money order or through your bank’s online bill pay system. Paying the bill through your bank will probably be faster and ensure that you have paid the bill within the 30 days.

I do understand why you want a letter in hand before you pay, but I can also understand why the collector doesn’t want to provide that until you have paid. There is a difference between having a letter that explains the terms of an agreement and a letter that says a debt is paid in full. You could certainly ask for a letter stating the terms as they have been explained to you, but until you have paid the bill in full you cannot expect to have a letter that says it has been paid.

I do believe that having a paid-in-full letter may be important to prevent further collection efforts down the road. It might also prove useful to you if the account does eventually show up on your credit reports. The way that medical debt is reported by FICO is slowly changing to help the consumer. FICO's new scoring model lessens the impact of medical debt. However, the three reporting agencies (Equifax, Experian and Transunion) are under no obligation to use the new model. While I would not suggest adding an explanation to your credit report via the 100-word statement, having the letter to show to prospective lenders in the future might be of some help. Many lenders view medical debt differently from other types of debt, especially if you can show that the debt was paid in full.

I would also suggest that, if you have not already done so, you obtain a copy of your credit report. Go to to get a free copy. Checking your reports for accuracy and errors on an annual basis is good practice for all consumers.

Remember to always use your credit smarts!

See related: 100-word statements can hurt more than help

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Published: August 13, 2016

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Updated: 10-28-2016

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