Generally, you should start by offering 20% to 30% of the debt as a lump-sum payment (assuming you can afford this amount). This low starting point gives you room to negotiate while showing you're serious about resolving the debt. Be realistic and base your offer on what you can afford.
Contact the collection agency to work out payment arrangements. If you are unable to pay the debt in full, some collection agencies may offer you a settlement amount. While settling the debt is better than leaving it unpaid, a settlement is considered negative because you did not pay the full amount owed.
If the medical debt is the one in collections, deal with it first. But then make sure your credit card debt doesn't wind up in collections, too. Get into the habit of making all your payments on time: The credit bureaus reward your score when you show them you can do this.
For medical debt, creditors will typically settle for roughly the amount insurance companies pay for the same services, which is usually much lower than the amount that would be billed to an uninsured person.
In some cases, you may be able to settle for much less than that 50.7% average. Collectors holding old debts may be willing to settle for 20% or even less. The statute of limitations clock starts from the date the debt first became delinquent.
The extent to which lawyers can reduce medical bills varies depending on the circumstances. However, it's not uncommon for attorneys to secure reductions of 25% to 40% on medical bills when the insurance proceeds are limited, medical bills are high, and/or there a high hospital liens or other liens.
Medical debt can also lead people to avoid medical care, develop physical and mental health problems, and face adverse financial consequences like lawsuits, wage and bank account garnishment, home liens, and bankruptcy.
Generally, paying the original creditor rather than a debt collector is better. The creditor has more discretion and flexibility in negotiating payment terms with you. And because that company might see you as a former and possibly future customer, it might be more willing to offer you a deal.
A smaller number (about 25%) sell patients' debts to debt collectors and about 20% deny nonemergency care to people with outstanding debt. More than two-thirds of hospitals in the sample sue patients or take other legal action against them.
I am aware that there is a debt from [name of hospital/doctor], but I am unaware of the amount due and your bill does not include a breakdown of any fees. Additionally, I am allowed under the Health Insurance Portability and Accountability Act (HIPAA) to protect my privacy and medical records from third parties.
To Whom It May Concern: I am writing to negotiate the above medical bills because I am unable to pay the amount requested. Pursuing me for these bills will force me (and my family) into further financial hardship. This is where you explain your current financial situation and why you are unable to pay.
You can file a complaint against the collector with the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and your state's attorney general's office if they fail to provide sufficient evidence of the debt but continue collection efforts.
Most debt collectors won't sue for less than $500. However, any unpaid debt can potentially result in debt collection legal action regardless of the amount owed if the collector determines suing worthwhile.
Ask for more than what you think you'll get
There's no precise formula, but it's generally recommended that personal injury plaintiffs ask for about 75% to 100% more than what they hope to receive. In other words, if you think your lawsuit might be worth $10,000, ask for $17,500 to $20,000.
The CFPB's action will ban the inclusion of medical bills on credit reports used by lenders and prohibit lenders from using medical information in their lending decisions.
Even if you owe a hospital for past-due bills, that hospital cannot turn you away from its emergency room. This is your right under a federal law called the Emergency Medical Treatment and Active Labor Act (EMTALA).
Healthcare providers' billing offices are used to negotiating. Do not hesitate to ask for a reduced fee if a medical bill is too high for you or your family. Other options include applying for Medicaid if you are eligible or asking for a payment plan if you cannot get a reduced cost.
For complex negotiations, such as those involving large bills, insurance disputes, or multiple providers, the process could take anywhere from one to three months.
All hospitals offer discounts or bill forgiveness based on income. On average, a family of 4 earning less than $100,000 a year will qualify. You can apply for financial assistance before or at the time of your hospital treatment or service. You do not need to wait for a bill.
Once you've agreed on a payment amount, ask for a written statement showing that your offer will be accepted as “payment in full.” You can also ask to have the account removed from your credit reports; however, debt collectors are not legally required to honor such a request.
Your Least Acceptable Agreement is the minimum you need before walking away. It is the minimum you are willing to accept, and so forms one of the outside parameters of your negotiating envelope.
Paying a debt in full is better than settling a debt
You'll also save money. Settling the debt eliminates future interest and reduces the amount you'll repay to the lender. When you settle a debt, the creditor or debt collector will typically report the account as settled for less than what you owed.