Medical Bill Sent to Collections? Your Rights Under Federal Law
A medical bill in collections is stressful — but you have strong legal rights under the FDCPA and new credit reporting rules. Here's what to do immediately.
Receiving a collections notice for a medical bill is alarming, but it doesn't mean the debt is valid, final, or that you've lost your rights to dispute it. Federal law gives you specific protections — and in 2023, the three major credit bureaus stopped including most medical debt on credit reports. Here's what you need to know and do.
Your Rights Under the FDCPA
The Fair Debt Collection Practices Act (FDCPA) applies to third-party debt collectors — including medical debt collection agencies. Under this law:
- You can demand debt validation. Within 30 days of first contact, send a written request asking the collector to verify the debt. They must stop collection activity until they provide proof the debt is valid and the amount is correct.
- You can dispute the debt. If the amount is wrong, the service was never received, or billing errors exist, dispute it in writing. The collector must investigate.
- Collectors cannot harass or deceive you. No calling before 8am or after 9pm, no threatening statements, no misrepresenting what you owe.
- You can request they stop contacting you. A written "cease and desist" letter stops all contact (though it doesn't eliminate the debt).
New Credit Reporting Rules (2023–2024)
Major changes have happened to medical debt and credit reporting:
- Medical debts under $500 were removed from all three major credit bureau reports in 2023
- Paid medical debts no longer appear on credit reports
- Debts in collections have a 1-year grace period before appearing on reports (giving time to resolve disputes)
- The CFPB proposed additional rules in 2024 to ban medical debt from credit reports entirely — check current status
Check Whether the Hospital Violated Federal Rules First
Before paying or negotiating, check whether the hospital is nonprofit. If it is, federal rules under IRS 501(r) required them to:
- Notify you about financial assistance before sending to collections
- Give you at least 240 days to apply for charity care
- Screen your eligibility before referring to collections
If they didn't follow these steps, the referral to collections may itself be a violation. You can report this to the IRS (which oversees nonprofit hospital compliance) and use it as grounds to have the collection removed.
What to Do Right Now
- Do not ignore it. Even if you plan to dispute, ignoring a collections notice can result in a lawsuit.
- Send a debt validation letter within 30 days. Use certified mail. This forces the collector to prove the debt is valid before pursuing collection.
- Check if the original hospital was nonprofit. If yes, verify they followed 501(r) requirements before sending to collections.
- Review the original bill. Request an itemized bill from the original provider. Errors in the original bill don't disappear when it's sold to a collector.
- Negotiate if the debt is valid. Collectors often buy medical debt for pennies on the dollar and have room to settle for 20-40 cents on the dollar. Get any settlement agreement in writing before paying.
Medical debt in collections is not the end of the road. Between dispute rights, validation requirements, and the new credit reporting rules, you have real tools to fight back — especially if the original bill was inflated or the collection process skipped required steps.
This article is for informational purposes only and does not constitute legal advice.