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The Debt Adviser

Curing an overdue medical debt

Dear Debt Adviser,
I have medical bills and I have been paying monthly payments. But they turned my account over to a collector in spite of my regular monthly payments. Can they do this? Also, the collector is charging me interest. Do I have to pay the interest?
Abbi

Dear Abbi,
Depending on who you talk to, medicine is the highest and noblest of callings, or it's a business. I think you have been talking to the latter of the two. I suggest you find a way to get to the former!

In answer to your first question, yes, a hospital or physician can turn your account over to a third-party collection agency if you are making smaller-than-agreed-upon monthly payments.

It seems a heartless thing to do to someone who has been sick and is making every effort to make good on a debt; yet, hospitals often have thousands of overdue accounts. It is a dilemma that many community service providers face. Most will want to find a way to work things out. It's usually part of their public service nature to do so and I am hopeful that you will be able to work this out. Sometimes, however, misguided individuals are put in charge of billings and collections and they can be no better than bullies. These are, fortunately, the exception to the rule.

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I suggest that you call the hospital or physician and speak to the billing person or department. Explain what has happened and why. Be ready to offer a payment that you can afford and represents your best effort to repay the bill. Usually that will do the trick, unless there is some other complication to the story.

If you are told that it's too late, or the payment is too small, ask to speak to a manager and keep going up the chain of command until you get to the hospital chief financial officer, or the doctor if the bill is due to him or her. Persistence, sincerity and a reminder that you are recovering from an illness are usually effective ways to get the bill recalled from the collector.

Your second question is a little more complicated. The Fair Debt Collection Practices Act states that the following is an unfair practice: "(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law."

Look at the agreement you signed when you received the medical service. If a rate of interest was not specified, adding interest would be an unfair collection practice according to the FDCPA. However, some state laws allow collection agencies to collect interest along with the original debt owed regardless of the circumstance. California is an example of a state with this type of law.

Check with the Attorney General's office in your state to inquire if your state has a law that allows collectors to charge interest on debt obligations. (Visit the National Association of Attorneys General Web site for a list of every state's attorney general.) If not, you are not required to pay the interest and you should report the collection agency to the Federal Trade Commission for unfair collection practices.

Another quick note about collectors: Do not allow them to harass you in any way. The FDCPA protects debtors from collection practices that are abusive, such as threat of violence, use of obscene or profane language, publication of a debt or placement of phone calls after 9 p.m. or before 8 a.m.

Abbi, whether you must pay interest or not, I urge you to continue making monthly payments. If the collection action progresses to a court action, your ability to show the judge that you have been doing your best will weigh heavily in your favor.

Take care of yourself.

The Debt Adviser, Steve Bucci, is the president of Consumer Credit Counseling Service of Southern New England. Visit CCCS for additional debt advice or click here to ask a debt question.

-- Posted: April 30, 2004
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See Also
Know your rights under the Fair Debt Collection Practices Act
Debt collector horror stories
16 rules: Which bills to pay first when money's tight
Financial advice glossary
More Debt Adviser stories

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