How To Rebuild Credit After Bankruptcy
If you or your insurance company has paid a medical bill but it still appears in your credit history, it’s time to write a letter to the credit bureaus to find out why.
You can use my sample letter, below, as a guide. I’ve written this template to leverage HIPAA laws.
How To Write a Medical Collection Letter
- Copy and paste the letter into a new document.
- Replace the text highlighted in yellow or inside brackets with your own information.
- Remove the brackets and yellow highlighting if necessary.
- Print and sign the letter.
[Name of credit reporting agency
Credit reporting agency address
Credit reporting agency City, State, ZIP]
Dear [name of credit reporting agency]
I am writing with regard to account number [account number] from [name of original creditor] on my personal credit report.
Please advise me as to the name and address of the medical provider, the date and type of service, and to whom the service was provided.
I am further requesting the name of the person providing this account data, and the manner in which it was provided, in order that I may pursue additional remedies.
Very truly yours,
Your City, STATE ZIP
Your Social Security Number]
Disclaimer: These letters are provided for your information only and are not intended to be legal advice. You are responsible for all content and all consequences if you adapt these template letters for your personal use. As with all legal matters, if you have concerns about the potential legal consequences of sending a goodwill letter, you should consult with a licensed attorney.
Where to Send Medical Collections Letters
The point of a paid medical collections letter is to find out why old medical debt has appeared on your credit report.
You should send your letters via certified mail to the three credit bureaus:
P.O. Box 1000 Chester, PA 19022
P.O. Box 740241 Atlanta, GA 30374-0241
P.O. Box 2104 Allen, TX 75013-0949
If you don’t hear back from a credit bureau within 30 days, be sure to follow up with another letter or a phone call.
How Did Medical Debt Get On My Credit Report?
A hospital, clinic, or doctor’s office will not report your medical bills to the credit bureaus because health care providers are not lenders.
However, if your medical debt remains unpaid for 180 days, your health care provider can sell your unpaid debt to a collection agency.
The collection agency will likely report your medical collections account to the three major credit bureaus, and you’ll start getting letters and phone calls from the debt collector.
At about the same time, the medical collections account will appear in your credit history.
Your credit score could decrease by 100 points or so if you had an excellent credit score before the collections agency reported your old medical debt.
Why a Paid Medical Collection Appears In Your Credit History
A lot of people think paying off their medical debt will delete the negative items from their credit history.
In fact, many people pay off old medical debt so it will stop pulling down their credit score.
Unfortunately, most of the time, paying off a balance will not remove the collection account from your credit file.
Paying the bill could turn the collections account into a “paid medical collection.” But a paid collection still hurts your credit score.
If you want to erase a paid medical collection from your credit report, you’ll need another approach:
A Goodwill Adjustment
You could write a goodwill letter asking the debt collector to erase your paid medical collection as an act of goodwill.
Unlike the letter above, a goodwill letter should be more personal. You’re asking for a favor.
Tell the creditor why you’d like the paid medical bill removed: because you’re trying to buy a house or you need an affordable car loan and the medical collection is hurting your loan applications, for example.
How To Remove A Bankruptcy From Your Credit Report
If you don’t know which creditor has reported the debt to the credit bureaus, use the letter template at the top of this post to find out.
Then you’ll know where to send your goodwill letter.
Removal for Inaccuracy
When you receive your first letter from a medical debt collection agency, you should respond immediately with a debt validation letter, written to the collection agency itself (not the credit bureaus).
A validation letter asks the collection agency to prove you owe the debt. The Fair Debt Collection Practices Act gives you this right.
Maybe your health insurance company or Medicare / Medicaid already paid the medical practice.
Maybe you paid the past-due bill out of pocket or made other payment arrangements with the provider.
Maybe the debt has some inaccuracies and must be fixed or removed.
You have 30 days after first hearing from the collection agency to request debt validation.
If the collection agency can’t validate your debt, it’ll have to remove the negative items from your credit.
Tips for Dealing with Collection Agencies
Collections agencies have a bad reputation. Even good collection agencies cross the line sometimes when they deal with debtors.
You have to know your consumer rights before you start dealing with a collections agency.
Read the Fair Credit Reporting Act and the Fair Debt Collection Practices Act so you’ll know exactly what a debt collector can and can’t do.
For example, a debt collector can’t threaten you with criminal prosecution. It can’t call you late at night or early in the morning. In fact, an agency can’t call you at all if you’ve requested to communicate only by writing.
A third-party debt collector has one goal: to inspire you to pay your past-due balance. That’s why you see words like “final warning” in aggressively worded letters from collections agencies.
They’d like to scare you into making a payment so settle your medical billing issue. But most collection agencies will follow the law after you indicate you know your rights.
Another of your rights comes from your state’s statute of limitations on medical bills.
These statutes limit how long you can be held legally responsible for a debt. If the statute expires, you’d still owe the money, but you couldn’t be sued for repayment.
Haven’t Paid Yet? Try a Pay-for-Delete Agreement
This post is about removing a paid collection account from your credit which means you’ve probably already paid your old medical bill.
But if for some reason you haven’t paid yet and you’re hearing from a collection agency about a debt you legitimately owe, don’t pay the bill or set up a payment plan yet.
Instead, call the collection agency and offer to pay half the balance due in exchange for the agency erasing the medical collections account from your credit history.
This is known as a pay-for-delete agreement. You’re using your payment — which the collection agency needs and wants — as leverage to remove the collection from your credit history.
If you come to an agreement on the phone, get the deal in writing before paying. Don’t hand over a credit card or bank account number over the phone.
Instead, wait for the collection agent to send you a letter detailing the terms of your pay-for-delete agreement. Once you have the deal in writing, send a check.
Then follow up to make sure the collections agency held up its end of the deal by removing the negative items from your credit reports.
You can check your credit reports at annualcreditreport.com. Within 30 days of your payment, you should see the negative items disappear.
Short on Time? Try Calling a Pro
You can hire a professional to advocate on your behalf to collections agencies, credit reporting agencies, and medical providers.
Lexington Law Credit Repair is one of my favorite credit repair companies.
You’ll pay a subscription fee each month, and Lexington Law’s attorneys and paralegals will write your dispute letters, goodwill letters, and medical collection letters for you.
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