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We have been made aware of a growing concern that collection agencies are increasingly not reporting debts to credit bureaus. Believe us when we say that creditors across various industries are voicing their complaints. Obviously, this has a negative impact on the recovery rate.

If collection agencies had the ability to report every legitimate debt, they certainly would when all other collection efforts fail. However, the reality is that Credit Reporting Agencies (CRAs) — TransUnion, Experian, and Equifax — do not permit it in all cases.

Here is an excerpt from the credit reporting manual of one of the major CRAs:

We does not accept the following types of data from our furnishers, either directly or as collection accounts that have been assigned to third parties.  Fines and Fees – Examples include but are not limited to: –  Towing Charges – Vehicle Storage Fees – Parking and Traffic Tickets/Fines – Toll Road Fines/Fees – Ordinance Violations – Library Fines – Video Rental Fees – Prequalification Fees – Brokerage Fees – Eviction Fees Continuity Clubs – Examples include but are not limited to: – Health Club Dues – Karate Club/Martial Arts Dues – Magazine Subscriptions – DVD/Book Club Fees  Pre-Paid Debit/Gift Cards  Checking/Savings Account Activity/Balances  Home Owners’ Association (HOA) Dues Child Support Enforcement Data from Non-Government Entities Tribal loans not compliant with federal and state lending laws  Unpaid Taxes* Unacceptable Data by Industry Type – Bail Bonds Companies – Check Cashing Companies – Pay Day Loan Companies

The banking industry has been hit with what the CFPB called “Junk fees” and there is a full assault on collection agencies attempting to collect medical debt – not only from the CFPB on the federal side, but from the state side too.

Already a dozen states made it illegal to credit report on medical debts. Even a state like Indiana (a traditional red state) is not only attempting to block credit reporting but also stating that collection agencies would not be able to get judgments if they file suit.  This is problematic.

If the balance merits it ($2K+) and the debtor has a decent credit score, job and maybe some assets like a home, Collection Agencies could file suit.

( Article written on 02/20/2025)

One of the most effective tools in recovering unpaid medical bills has been credit bureau reporting. Patients fear that outstanding medical debts will tarnish their credit reports, reducing their chances of obtaining loans and potentially affecting employment opportunities. However, this window of opportunity is gradually closing as CFPB and states are gradually enact laws to stop or restrict credit bureau reporting of medical debts, making recovery efforts very challenging.

Act Now: Changing Laws Are Making Healthcare Debt Recovery More Challenging

Its all happening in front of us – Federal and state governments are rapidly eliminating the credit reporting of medical debts or imposing strict restrictions, making healthcare debt recovery increasingly difficult. The window to recover unpaid medical bills is closing fast.

What are you waiting for ? If you have not collected your unpaid medical bills yet – Forward them to a medical collection agency fast! Need a collection agency? Contact us  Time is  running out !

Start the Collections Process Immediately

It’s imperative to initiate the collections process early, before patients begin to view their medical bills as a low priority, believing there will be no repercussions for not paying. Delaying action can result in missed opportunities to recover debts that are rightfully owed.

Credit Reporting Agencies Are Minimizing the Impact of Medical Debts

To make matters worse, credit reporting agencies like Equifax, TransUnion, and Experian, along with credit scoring models such as FICO and VantageScore, have already started to minimize the impact of medical bills on credit scores. This means unpaid medical debts may no longer significantly affect a patient’s creditworthiness, reducing their incentive to pay.

List of Laws Passed and Pending Approval 

Federal regulations like the “No Surprises Act” aim to protect consumers from unexpected medical bills, further complicating the debt recovery process for healthcare providers. Jun, 2024 – CFPB Proposes to Ban Medical Bills from Credit Reports Entirely. ( All across USA) Connecticut – May 9, 2024- Public Act No. 21-129 , Public Act No. 24-6 Connecticut Governor Signs Bill Prohibiting Health Care Providers from Reporting Medical Debt to Credit Reporting Agencies. Colorado – House Bill 21-1198, Colorado law prohibits credit bureaus from reporting medical debt or factoring medical debt into a credit score unless the consumer report is to be used in connection with a credit transaction that involves, or that may reasonably be expected to involve, a principal amount that exceeds the national conforming loan limit value for a one-unit property as determined by the federal housing finance authority. New York – Senate Bill S4907A, SB 8373 , Fair Medical Debt Reporting Act, This law prohibits hospitals, health care professionals, and ambulance services from reporting medical debt to consumer reporting agencies. Nevada – Senate Bill 248 Virginia – Bill, HB 1370 , HB 1265 California – Assembly Bill 1020 (AB 1020) Maryland – Medical Debt Protection Act Washington State – House Bill 1531 (HB 1531) , HB 2119 Minnesota – Minnesota Statutes Section 332.70 Illinois – House Bill 5482 Massachusetts – Senate Bill S.675 Oregon – House Bill 3076 Maine – Legislative Document 110 (LD 110) , SB 908 Texas – House Bill 1448 Florida – Florida reduces statute of limitations for medical debt to three years New Jersey – AB 890 Virginia-  HB 1370 Wisconsin – AB 786 Rhode Island – HB 7103 Vermont – (SB 217) Oklahoma – HB 3576, and HB 4148 Indiana – HB 1128 Equifax, Experian, and TransUnion: Announced removal of paid medical collection debt from credit reports. Extended the time before unpaid medical collection debt appears on credit reports from 6 months to 1 year. Starting in 2023, medical collection debt under $500 is no longer included on credit reports.

Be First in Line Before Patient Finances Deteriorate

Medical collections should be a top priority because patients’ finances can deteriorate very quickly; they might accrue additional bills from other healthcare providers. You want to be first in line to secure payment before funds are depleted elsewhere. We strongly recommend sending accounts to a collection agency after 60 to 90 days of non-payment, even though medical credit reporting can now occur after one year due to stringent new laws.

Choose a Reputable Healthcare Collection Agency

When hiring a healthcare collection agency, you must select one that will not tarnish your reputation during collections. Ensure the agency:

• Follows all federal and state laws
• Is licensed to collect in all 50 states
• Keeps patients’ data safe and is HIPAA compliant
• Offers bilingual services
• Serves hundreds of healthcare clients
• Has a track record of delivering excellent recovery rates

Don’t Wait Until It’s Too Late

The landscape of medical debt recovery is changing rapidly. Act now to protect your revenue and maintain the financial health of your practice. Initiate the collections process promptly to navigate these challenges effectively.

Negotiating a payment for an overdue bill involves communication with the creditor or collection agency to find a mutually agreeable solution for repaying the debt. This process requires preparation, clear communication, and understanding of your financial situation. Here’s a detailed guide with examples for each point:

1. Negotiation Strategies:
   • Detail: Be strategic in your negotiation. Start by offering less than you know you can afford to leave room for negotiation. Also, express your willingness to pay immediately or in fewer installments for a potentially better deal.
   • Example: If you’ve determined you can afford to pay $300 per month, start by offering $200 per month. Or, if you can make a lump-sum payment, offer 70% of the total debt as a settlement, leaving room to negotiate up to 80% or 85%.
2. Remain Persistent and Patient:
   • Detail: Negotiations can take time, and creditors may not accept your first proposal. Remain patient but persistent, and don’t be discouraged if you need to make multiple calls or send several letters.
   • Example: Your first offer to settle the debt for 50% of the total amount might be rejected. However, after a few weeks and several discussions, the creditor agrees to a 65% settlement, which is still within your budget.
3. Review Your Financial Situation:
   • Detail: Assess your monthly income and expenses to determine how much you can realistically afford to pay toward the overdue bill without compromising your ability to cover essential expenses.
   • Example: If your monthly take-home pay is $3,000 and your monthly expenses (rent, food, utilities, minimum debt payments) total $2,500, you have $500 left. However, you should not offer the entire $500 as you may need some for emergencies. Consider starting with an offer of $200-$300 per month.
4. Understand the Consequences of Your Negotiation:
   • Detail: Be aware of the potential implications of your negotiation, including any effects on your credit score, tax liabilities (if settling for less than the owed amount), and the creditor’s policies on reporting to credit bureaus.
   • Example: If you negotiate a debt settlement for $600 on a $1,000 debt, be aware that the forgiven $400 may be considered taxable income. Also, understand that a settlement can impact your credit score, but it might be a worthwhile trade-off to clear the debt.
5. Gather Information about Your Debt:
   • Detail: Know exactly how much you owe, any additional fees or interest that have been added, and how long the bill has been overdue. This information will help you understand your starting point in negotiations.
   • Example: If you originally owed $1,000 and late fees plus interest have added another $200, your total debt is $1,200. Understanding these details will help you negotiate more effectively.
6. Communicate with Your Creditor or Collection Agency:
   • Detail: Reach out to the creditor or collection agency to express your intention to pay and to negotiate the terms. Always stay calm, polite, and professional during these communications.
   • Example: “I’m calling because I’ve fallen behind on my payments and I want to resolve this. I’ve reviewed my finances and I’d like to discuss a possible payment plan that fits within my budget.”
7. Leverage Statutes of Limitations (if applicable):
   • Detail: Be aware of the statute of limitations on debt in your state, which limits how long a creditor can take legal action against you. If your debt is close to or beyond this period, you may have additional leverage in negotiations.
   • Example: You discover that the statute of limitations on your type of debt in your state is 5 years, and your debt is 4.5 years old. You inform the creditor of this fact during negotiations, which may motivate them to accept a lower settlement to avoid losing their right to sue.
8. Propose a Realistic Payment Plan or Settlement:
   • Detail: Based on your financial review, propose a payment plan that is realistic for you. If you’re able to offer a lump sum, you might be able to negotiate a settlement for less than the total amount owed.
   • Example: “Given my current financial situation, I can commit to a monthly payment of $250 until the debt is fully paid. Alternatively, I can make a one-time payment of $800 to settle the entire debt.”
9. Request Everything in Writing:
   • Detail: Once you reach an agreement, ask for the terms to be sent to you in writing before you make any payments. This document should include the payment amount, frequency, total number of payments, and any agreement on how the debt will be reported to credit bureaus.
   • Example: After negotiating, you receive a letter stating, “As agreed upon, a monthly payment of $250 for 5 months will settle the debt in full. Upon completion, the account will be reported as ‘settled’ to the credit bureaus.”
10. Keep Records of Your Payments:
    • Detail: Maintain thorough records of all communications and payments related to the debt, including dates, amounts, and confirmation numbers.
    • Example: Keep a folder or digital file with copies of the written agreement, payment confirmations, bank statements showing the payments, and any correspondence with the creditor.
11. Monitor Your Credit Report:
    • Detail: After the debt is settled, check your credit report to ensure the payment is accurately reflected. If there are any discrepancies, dispute them with the credit reporting agencies.
    • Example: You notice the debt is still listed as unpaid three months after completion. You gather your documentation and submit a dispute to the credit bureaus to correct the error.
12. Negotiate Removal of Negative Information (Optional):
    • Detail: In some cases, you can negotiate with the creditor to remove negative information from your credit report in exchange for payment, known as “pay for delete.”
    • Example: “I understand the impact of this debt on my credit report. If I commit to the agreed payment plan, would you consider removing the negative entry from my credit report?”
13. Consider Consulting with a Nonprofit Credit Counseling Agency:
    • Detail: If you’re overwhelmed or unsure how to proceed, a nonprofit credit counseling agency can offer guidance, help you understand your options, and even negotiate with creditors on your behalf.
    • Example: Suppose you owe $5,000 across various debts and can’t see a way to negotiate effectively on your own. A credit counseling agency might work with your creditors to consolidate your debts into one monthly payment at a lower interest rate, making it easier to manage.
14. Prepare for Future Financial Stability:
    • Detail: Use this negotiation as a learning experience to better manage your finances moving forward. Establishing a budget, saving for emergencies, and monitoring your credit regularly can prevent similar situations in the future.
    • Example: After successfully negotiating your overdue bill, you start setting aside 10% of your monthly income into an emergency fund. You also use budgeting apps to track your spending and stay within your means.
15. Seek Legal Advice for Complex Situations:
    • Detail: If the debt involves significant amounts, legal issues, or if you’re considering bankruptcy as an option, consulting with a legal professional can provide valuable guidance and protect your interests.
    • Example: Facing a debt of $25,000 with potential legal implications, you consult with a bankruptcy attorney to explore your options. The attorney advises you on whether bankruptcy is a viable solution or if negotiating the debt is preferable.

Through careful planning, clear communication, and understanding your rights and options, you can effectively negotiate payments for your overdue bills and work towards financial recovery. Each step taken towards resolving debt not only improves your current financial situation but also lays the groundwork for stronger financial health in the future.

Debt collectors employ a range of strategies to secure payments from debtors over the phone. It’s crucial for all collection agencies to adhere strictly to legal and ethical guidelines, ensuring their methods are transparent and devoid of any misleading tactics. Here are some of the common strategies and things they might say during the collections call:

1. Explanation of Debt: They ensure that they are speaking to the correct person. Once they do they tell that they are a collection agency and proceed by explaining the debt, including its origin, amount, and any interest or fees that have accumulated.
2. Urgency and Consequences: Collectors often emphasize the urgency of settling the debt and may outline the consequences of non-payment, such as legal action, credit score impact, or continued accumulation of interest and fees.
3. Negotiation and Settlement Offers: Collectors know that getting the debtor on phone next time could be a challenge, therefore its better to settle the debt now than during the next phone call. They may offer a settlement for less than the total amount owed or propose a payment plan. This approach can be more appealing to the debtor and increases the likelihood of payment.
4. Persistence and Follow-Up: Debt collectors are typically persistent, calling repeatedly if they don’t reach the debtor or if the debtor has previously been unresponsive. Persistent and consistent communication is a common tactic. This includes regular phone calls and follow-up letters, making it clear that the debt remains a priority for the collector. They may even call the co-signer (if any).
5. Verification of Debtor’s Information: They often verify the debtor’s personal and financial information to assess the debtor’s ability to pay.
6. Legal and Official Language: The use of legal terms or official-sounding language is common to emphasize the seriousness of the situation.
7. Emotional Appeal: Some collectors may use emotional appeals, stressing the importance of paying debts as a moral or ethical obligation.
8. Reminder of Potential Settlements: They may remind debtors of the benefits of settling the debt, like improving their credit score or avoiding legal action. Some even offer to remove this credit bureau entry all together, improving their credit score further.
9. Documentation Requests: Collectors may request or offer to send documentation related to the debt, such as account statements or original agreements, either as proof of the debt or as part of a payment agreement.
10. Payment Methods: They typically discuss available payment methods, such as direct debit, online payments, or mailing a check or money order. Providing multiple options can make it easier for the debtor to make a payment.
11. Deadline Emphasis: Collectors often set deadlines for payments or for accepting settlement offers, creating a sense of urgency.
12. Record of Communication: Some collectors may mention that the call is being recorded for compliance or quality assurance purposes. This can also serve as a reminder of the seriousness and official nature of the conversation.
13. Resolution Focus: The ultimate goal of the collector is to find a resolution, whether it’s full payment, a settlement, or a payment plan. They often stress the benefits of resolving the debt for both parties.
14. Avoidance of Illegal Practices: In most situations, there are strict regulations governing debt collection practices. Legal debt collectors avoid threats, harassment, calling at unreasonable hours, or making false claims about legal actions.
15. Leveraging Credit Reporting: They may remind debtors that unpaid debts can be reported to credit bureaus, which can negatively impact the debtor’s credit score and ability to obtain loans, mortgages, or even employment in some cases.
16. Highlighting Legal Implications: In some cases, collectors might explain the potential legal implications of not paying a debt. This can include lawsuits, wage garnishment, or property liens, depending on the jurisdiction and the nature of the debt.
17. Compliance with Local Laws: Apart from FDCPA, collectors are typically well-versed in local laws and regulations governing debt collection and ensure that their tactics are within legal boundaries. They may reference these laws during conversations to add legitimacy to their actions.
18. Regular Updates and Reminders: If a payment plan is arranged, collectors often provide regular updates and reminders about upcoming payments to keep the debtor on track.

Recommended Reading: Excuses Debtors give during Collection Calls

It’s essential for debtors to remember that while collectors have methods to encourage payment, they are also required to treat debtors fairly and are bound by specific legal guidelines.

Collection Agencies often deal with sensitive personal and financial information, understanding and implementing Data Privacy and Data Security is crucial. Here’s how these concepts are perceived and managed in a collection agency context:

1. Data Privacy in a Collection Agency:
   • Definition and Focus: Data Privacy for a collection agency involves handling personal information of debtors in a manner that respects their privacy rights. This includes information like names, contact details, financial data, and debt-related information.
   • Regulatory Compliance: Collection agencies must comply with specific laws like the Fair Debt Collection Practices Act (FDCPA) in the U.S., which sets standards for the collection of debts and provides guidelines on how debtor information can be used and disclosed.
   • Examples:
     • Ensuring that debtor information is not disclosed to unauthorized third parties, like friends or family, without the debtor’s consent.
     • Obtaining consent from debtors before using their personal information for purposes other than debt collection, such as for marketing other services.
     • Providing debtors with the option to opt out of certain forms of communication or data usage.
     •  Sharing only the minimum necessary health information for a specific purpose. Not disclosing actual treatments received by patients, they should only be referred as procedures or doctor visits.
2. Data Security in a Collection Agency:
   • Definition and Focus: Data Security in a collection agency involves protecting debtor data from unauthorized access, cyber-attacks, and data breaches. This is essential not only for protecting the privacy of debtors but also for maintaining the trustworthiness and integrity of the agency.
   • Technical Measures: Implementing robust cybersecurity measures such as encryption of data, secure data storage solutions, strong access controls, and regular security audits.
   • Examples:
     • Using encrypted communication channels when discussing debt information with debtors or reporting to credit bureaus.
     • Regularly updating IT systems and training staff to recognize and prevent potential cyber threats like phishing attacks.
     • Implementing strict access controls so that only authorized personnel can access sensitive debtor information.

For a collection agency, maintaining high standards of Data Privacy and Data Security is not just about legal compliance, but also about building trust with clients and debtors. Mishandling of data can lead to legal repercussions and damage to reputation, while strong privacy and security practices can enhance reliability and professionalism in the eyes of both clients and debtors.

Most common Data Compliance,  Data Security Laws and Ethical laws that Collection Agencies must follow

Here is a list of some of the key federal laws they are typically required to follow:

1. Fair Debt Collection Practices Act (FDCPA): This is the primary federal law that governs debt collection practices in the U.S. It prohibits debt collectors from using abusive, unfair, or deceptive practices to collect debts and sets guidelines on how and when they can contact debtors.
2. Telephone Consumer Protection Act (TCPA): This act restricts telemarketing calls and the use of automated telephone equipment. It also limits the use of pre-recorded voice messages, SMS text messages, and faxes.
3. Fair Credit Reporting Act (FCRA): FCRA regulates the collection, dissemination, and use of consumer information, including credit information. Collection agencies must ensure that the information they report to credit bureaus is accurate and must follow certain procedures when consumers dispute that information.
4. Gramm-Leach-Bliley Act (GLBA): Also known as the Financial Services Modernization Act, GLBA requires financial institutions, which can include debt collectors, to explain their information-sharing practices to their customers and to safeguard sensitive data.
5. Health Insurance Portability and Accountability Act (HIPAA): When collection agencies deal with medical debts, they must comply with HIPAA, which includes provisions for protecting the privacy and security of health information.
6. Bankruptcy Code: The U.S. Bankruptcy Code impacts debt collection, as it may restrict collection efforts against consumers who have filed for bankruptcy protection.
7. Uniform Commercial Code (UCC): The UCC, particularly Article 9, deals with secured transactions and can impact the collection of secured debts.
8. Consumer Financial Protection Act (CFPA): Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPA established the Consumer Financial Protection Bureau (CFPB), which can regulate debt collectors and enforce certain consumer protection laws.

Additionally, collection agencies must be aware of and comply with state-specific laws and regulations, which can vary significantly and may impose additional requirements or restrictions on their operations. These laws can include licensing requirements, statutes of limitations on debts, and additional consumer protections.