A new report shows that Arizonans have filed 439 complaints with the Consumer Financial Protection Bureau (CFPB) about medical debt collectors since the bureau started tracking such complaints in 2013. This is apparently the 11th highest rate of complaints in the nation, according to a Cronkite News report. The report issued by the U.S. Public Interest Research Group Education Fund said the almost 18,000 medical debt-collection complaints submitted to the CFPB made it the leading complaint to the agency.
Of those complaints, 63 percent were about firms trying to collect debt that was already paid, discharged through bankruptcy, unverified or never owed. The remaining complaints talked about aggressive or illegal behavior on the part of these medical debt collectors including impersonating lawyers, threatening jail time or even threatening physical violence. Consumer advocates say millions of Americans are holding medical debts on their credit reports and often, this is “false medical debt.”
What Collectors Can and Can’t Do
These aggressive collection practices are not necessary illegal, but agencies are bound by state and federal laws such as the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Dodd-Frank Act. There are limits under these laws on what collectors can and can’t do. For example, collectors cannot call debtors between 8 a.m. and 9 p.m. and cannot continue to call someone who has said they don’t owe the debt.
Collectors also cannot make false statements to collect debt and are prohibited from making threats of any kind. However, debt collection agencies frequently break these laws and use every trick in the book. Such collection efforts often hurt consumers by leading to bungled credit reports.
How the Process Works
So, how does the process work? When healthcare providers cannot collect the debt, they hire a collection agency to do so. If that doesn’t work either, the provider can sell the debt to a third party for pennies on the dollar. This cycle of buying and selling the debt goes on. So, often, collection agencies that get this debt years after it was incurred deal with old contact information.
They don’t have updated information on how much is owed or what the claim is worth. The system involves so many different parties from hospitals and insurance companies to collection agencies and out-of-network doctors, making accuracy challenging. This is why it is important for consumers to thoroughly understand their rights when it comes to debt collectors, including medical debt collectors.
Tips to Handle Debt Collectors
There are several steps you can take if medical debt collectors are harassing you:
- If you have a genuine financial hardship such as an illness in the family, a layoff or death, tell them about it and give them a valid reason as to why cannot pay off the debt right now. They need to know if you are in a hardship situation and what you are trying to do to get back on track. And, be truthful.
- Try to stay calm regardless of what the person on the other end is telling you. You won’t get anywhere if you lose your temper and start yelling and screaming. If you find yourself losing control, tell the collector you will talk with them later and hang up. If you need to talk to the same person again, tell them you would like to record their conversation. That would hopefully motivate them to remain on their best behavior.
- Ask specific questions. Don’t take empty threats like you’ll go to jail or that you will lose your home if you don’t pay up. Be calm and ask for specifics such as when you would be notified of the lawsuit. Or when they might take money out of your bank account. Most of the threats debt collectors make are illegal. The more information you arm yourself with, the more of an advantage you will have over these people.
- Take down copious notes. Have a pen and paper handy so you can write down all the details. Get the name of the person you talked to. Ask them to spell out their first and last name. Write down the date of the conversation and the time of the call. Write down everything that was discussed. This helps you maintain a degree of objectivity and take emotion out of the situation. More importantly, you’ll have a record of what was said.
- Read all your mail and email. If you get any correspondence from your creditors, don’t delete it or put it away in a drawer never to see it again. Open it, read it and understand it. If you need to take action, do so.
- Find out what you can afford. Go over your income and expenses and figure out what would be a realistic amount you can pay your creditors. Doing so will help you negotiate the best possible settlement or come up with a payment plan.
- It’s always better to deal directly with your creditors instead of allowing it to go to a collection agency. Try to work out an agreement with your creditors before the bill is sent to collections. It’s true that late payments can affect your credit. But allowing it to go to collections could do even greater damage.
- Get everything in writing. When you come up with a payment arrangement, get it in writing before you pay anything. If the terms change, you’ll have nothing to go by. Never give a debt collector your bank account information. If you agree on a payment, send out a check.
Filing for Bankruptcy
If you find that there’s no way out of a medical debt, talk to an experienced Arizona bankruptcy lawyer about filing for Chapter 7 bankruptcy. In fact, nationwide, mounting medical bills are the number one reason people file for bankruptcy protection. Chapter 7 bankruptcy can help individuals struggling with certain types of medical debt including medical bills who simply don’t have the means or the income to pay back their creditors. One big advantage of using Chapter 7 to discharge medical debt is that the process is generally quick, allowing you to get a fresh start. Also once you file for bankruptcy, those pesky collection companies are prohibited from calling you!