Collections can sometimes be tricky. The most common challenge is to identify the original debt that corresponds with that collection. Many collections stem from a medical bill. In most cases a medical debt will be a dispute between the medical provider and the medical insurance company. The provider will claim an amount the insurance company disagrees with. The unfortunate result is the individual who received the service, has now had their credit affected. The individual in many cases will not find out about this credit situation until they request some type of credit and the request is denied due to low credit scores because of the collection or the collection itself.
Resolve Your Collections
A major concern should be to resolve a collection or a neglected debt. The result of an ignored debt or collection can create a judgment against your credit.
When there is a medical collection involved, there will be additional time spent in this case. The reason for this extra time is there are more institutions that need to be contacted.
- First contact the party that provided the medical service. Inquire about the correspondence they have had with your insurance company and if there are still discussions to resolve the matter between them. Request copies of any written documentation that pertains to this matter, so you can resolve this debt. You will also need to request all communications between the medical provider and the collection agency.
- Contact the collection agency and request all correspondence they have had in this manner as well. They need to provide the proof given to them for this debt to be collected.
- Contact your insurance company and inquire as to the reason the medical provider would be collecting additional funds from you. There may be a provision within your policy, i.e. co-payment, deductible or they may only pay a maximum dollar amount for certain procedure, and it is possible you may not have been aware of these stipulations
Medical Collection Items
Once it has been determined who is owed and how much is owed, you will need to start compiling the written correspondence from each of the parties. If the insurance company is going to settle the debt, you will need to get a balance due, in writing, from the medical institution that is going to be paid. You will need to make sure you get written documentation from all who indicate their intentions. A common mistake is to trust what either the medical provider or the insurance company verbally agree to do to resolve the situation. If the insurance company pays the medical provider then you will need to ask the provider to inform the collection company that the debt has been settled. Again you should receive written notification and forward it to all three credit agencies.
If the collection is a result of some debt other than a medical situation, then identifying the original debt is necessary. If the collection is valid, and a balance remains you will need to get written copies from the collection company of all the documentation they have received regarding this debt.
If this debt is accurate and there is a balance, the collection agency will, in almost every case, settle for an amount that would be much less. This settlement can be as little as 50% of balance of the debt. The only exception for this settlement to be considered will be a one time payment of the settled amount.
For instance, there is an unpaid department store debt that had been sent to a collection agency. If the balance is $450, the collection agency may settle for $250. Get this in writing and send in a check or money order, documenting this transaction. Also request that the collector sends you a confirmation of the satisfaction of debt, and makes certain the letter references the department store and the account number. Once you receive the letter, mail it to the 3 credit reporting agencies, along with the department store, and request your credit records are updated.
Debts that cannot be settled
If the debt is not able to be settled as a one time payment as described in the previous paragraph, then an agreed payment arrangement will need to be made in writing with the collection agency. Another reason for attaining this agreement in writing is sometimes collectors will sell or transfer this collection to another agency. If there is written agreement then it can not be altered or changed. Protect yourself and keep good documentation and records of who you talked with, when you talked to them and what was said. Use the IDD form for tracking this information.