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Medical Debt Collector Dilemma


One of the debts on our debt spreadsheet is from an outstanding medical bill we owe. Before this month’s payment, we owed $5611.00. We’ve been making payments for years but have only been paying the minimum $25/month (with 0% interest). At some point we always knew we’d obviously pay more. But it was a lower priority when we have other student loan debts racking up over 6.5% interest!

Well, just this week we received a bill from the debt collection agency stating:

“If you will pay $3647.15 of your balance by phone using a debit card, credit card, or check by phone, our client has agreed to adjust the remaining $1963.85 and you will have a zero balance.”

Well, I thought it was a good deal. I immediately showed hubs.

“Hey, should we just pay this debt off and be done with it?!”

His thought is: no. We should continue making our minimum $25 payment as normal. He thinks that eventually they’ll come down even more. While we focus on my student loans we’re in no hurry with them. It can sit and wait (as we continue making our $25/month payments). They’ll be there when we’re ready to negotiate.

As a little backstory, at the time when we first incurred the medical debt (back in December 2013) I called and tried to negotiate settlements if I could pay the debt in full. We owed several different medical entities (I wrote about how hubs had a weird health crisis in one of my very first posts on this blog). When I called around, only one (0ut of maybe 4 or 5) would even negotiate. I’ve since heard Dave Ramsey talk about this on his radio shows: few medical entities (or collectors for medical entities) will negotiate and settle debts. I guess they’re less likely to do it than a major credit card company, for example.

So the fact that this company is offering a settlement now, I thought, was HUGE!

But then, I got a call today on my cell. It’s the debt collection company (who has never once tried to contact me before). They asked how we planned to pay our bill. I told them that we’ve been paying our bill and planned to continue the way we have been. They said that, no, we were not actually on a payment plan. That we needed to pay the bill in full. And then they started trying to confirm information (employer, address, etc.). I confirmed our address but, when they asked about employers I said I was uncomfortable talking about that and they got all huffy and ended up hanging up on me. No mention of the settlement offer that they had just mailed.

Soooo…what the heck, guys???

I don’t know what to do! I’ve heard many times on Ramsey’s show about nasty debt collectors calling employers, etc. I’ve literally never had a call from this entity before and have been making faithful payments. Now I don’t know if they’re lying, or trying to scare us into paying, or what?! And I was about to pay in full to receive this settlement, but now I don’t know if that’s a terrible idea – like if they’re trying to take advantage of us. For instance, if we pay with a debit card and then they try to withdraw more than we agreed to, etc. Or what if I’m being overly dramatic? I just have absolutely NO experience with debt collectors. And then we get this letter, and now this rude call, and now I’m worried about my boss getting a call… What the heck!?

Thoughts? Advice? Words of wisdom?

*****UPDATE: I’ve written some relevant updates in the comments section. I’ve now received a new/updated settlement offer (see comments). Looks like I may be getting rid of this debt sooner rather than later, after all! ******


  • Reply Sarah |

    This is my opinion. You owe the money so should pay it. You are in a much better position than you were a few years ago.

    I don’t have experience with debt collectors either. Is this amount due to one provider or many? If one, maybe call that provider to see if you can pay them though they may have sold it to the debt collector. I would never give a debt collector a credit card number, debit card number or checking account information. I wonder if you could mail them a check.

    I don’t think you should wait til they reduce it anymore.

    • Reply Ashley |

      We’re certainly planning on paying it, but they kind of made me feel like we were no-good debt shirkers when we’ve been making faithful payments as agreed upon. The debt is just to one place, but it’s a medical debt collection agency (not the hospital, itself). It’s kind of weird because on our bill it’s addressed from the collection agency, but the “Creditor” is still listed as the hospital. Our understanding was that the hospital routinely uses this collection agency for any long-term balances. They basically only handle short-term/one-time payment type things in house and this entity handles the rest. But this was all negotiated at the time of the debt being taken out. It’s not like the debt was sold because of non-payment. And the entity that called me today is not a new one. They identified themselves with the same name as what we see on our bill every month. Soooo, yeah. Just kind of strange.

      • Reply Sarah |

        I knew you were going to pay it…just didn’t want you to wait to see how low it could go. You had mentioned your husband thinks they will come down even further.

  • Reply Walnut |

    This sounds really shady. What evidence can they provide you that they are on the up and up? I would call whoever you’ve been making the $25/month payments to and ask them to validate that they have sold the debt to the collection agency.

    • Reply Jen From Boston |

      I agree. My first thought was that it’s a scam. I wouldn’t take them up on their offer.

      Also, in MA at least, it’s against the law for debt collectors to call you at work. Likely the same in AZ. Might even be a federal law.

  • Reply Cathy D. |

    Be careful that this is not a scam. Find out if your account has been sold to a debt collector, because if it has not, you could pay a collection agency (that has no relationship with your account) and still have the original debt unpaid.
    Never give a debt collector access to any of your accounts. They are notorious for being dishonest and taking more than what is agreed upon. Know the difference between a “push” and a “pull”. Suzie Orman says a push is when you give them the money, like a check or an electronic payment is sent, and a pull is when you give them access to your accounts and allow them to take any amount of money from your account (which is not recommended). Good luck!

  • Reply Julie |

    Agree with walnut. Sounds shady. I would contact the source of the original debt. There are many scams where scammers find out you owe money and threaten till you pay and then people find out it was all a scam and they still owe the original bill.

  • Reply Jax |

    Agreed with all the above commenters. Contact who you’ve been paying and make sure they haven’t sold your debt to a collector. If the collector calls again ask them to provide you in writing that they have the right to collect on the debt and do not communicate with them again until they do so. If they can’t prove they “own” the debt then you are not obligated to pay them.

  • Reply Margann34 |

    Sounds like a scam to me: incorrect information (you are following your paayment plan) specifically requesting payment by phone using credit card, check or debit card. BE VERY CAREFUL!

  • Reply barbolarb |

    Hi Ashley, I would suggest taking a few minutes to read up on the Fair Debt Collection Practices Act (FDCPA). The Wikipedia article is a pretty good overview, and it outlines the prohibited practices and boundaries for debt collection efforts. Most people don’t know it even exists, so debt collectors routinely overstep the boundaries outlined in the FDCPA. If you identify the debt collectors engaging in any of the activities state something like “The Fair Debt Collection Practices Act prohibits you from….” and they should usually desist immediately. My husband worked for a short stint at a company that collected on bad checks, and those were magic words, once a customer said them the interactions were always handled by a supervisor(usually more knowledgeable, and better able to negotiate settlements). FDCPA covers things like calls at odd hours, harassment, continuing to try to contact people at their places of employment after they’ve been asked to stop, abusive language, or idly threatening legal action, among other things. And never, never give them your debit card number. Get a cashier’s check. Hope that info helps!

  • Reply Lisa Wilcox |

    If they recently sent your account to collections, even if you have been paying, they collectors will start calling. I have had a settlement amount offered the same way, but then… a new letter would come with a new settlement balance! No one knew the name of the person who sent the last letter. What a mess.
    If you agree to anything the collector asks for, it is now the new agreement.

  • Reply Maureen |

    As a (former) bankruptcy attorney, I have a lot of experience with debt collectors, shady practices, and FDCPA. I agree and disagree with some of the prior comments. **As an attorney I always state this does not constitute legal advice. 🙂 However, I agree you need to first, to the best of your ability, verify who this party is and what their claim is to the debt (obviously it is a third party debt collector), but try and getting an entity name/mailing address, etc. If you can get it in writing that is even better. Then Google them and check out the state’s attorney general reviews on the company before you possibly give them a cent above the $25.00 a month you have been paying. Try to verify that the settlement offer you received in hard copy bill and the phone call originated from the same place. It may be that the letter came from the same place as the call, but the left hand doesn’t talk to the right with collection agencies. The letters are usually automatically generated by some computer formula on balance owed, payments received, time elapsed, etc. Also, get the name or verifying details and document the date/time of everyone you talk to on the phone. If you don’t get answers ask for a supervisor. Document, document, document.

    Unfortunately, if they are now calling you, it is likely something you are going to have to deal with sooner than later. If you don’t have a payment arrangement in writing (I bet to guess your payment arrangement is not in writing) any debt collector can run down to the courthouse and attempt to sue you for the full amount at any time. If they sue they can garnish wages, etc. I know that it won’t get to that point because you are diligent, but that is worse case scenario. If they are condescending simply state, “I am very well aware of my rights under the FDCPA and other laws. I am willing to try and work with you, but I will not tolerate this type of tone, etc.” Whatever you do not state that you are represented by an attorney (sometimes people state that they are as puffery when they are in fact not). Under attorney-client privilege rules and the FDCPA the minute the debt collector hears this they know they would be violating FDCPA and they will no longer talk to you (and cannot legally). Then, it will become nearly impossible to settle it on your own without hiring an attorney because they will think you are represented. Undoing this little white lie (I have had clients end up in the predicament) is very hard.

    If you can verify that they will settle the debt make sure to get it in writing that the “agreed” payment constitutes full payment of the debt. In reading the comments I know that people are going to have very STRONG opinions about whether the debt should be fully repaid or not. I work in corporate legal now, but as a bankruptcy attorney for over 8 years I can guarantee you that most debts like these are settled for less. It’s expected, it’s the norm. I wouldn’t feel too guilty about it. This company is making a ton of money through other collections, interest on other accounts (not yours), etc. All they care about is the bottom line and getting as much recovery as then can as quickly as they can. The end of the month is a better time to negotiate. ONE fact that people often don’t know is if you do settle the debt you will likely receive a 1099C next tax season for the cancellation of any debt that is forgiven. It can be imputed income unless you can prove/state you are insolvent at the time the debt was settled (which you likely are with your student loan debt and mortgage despite the downpayment on the house). This is were consulting an accountant makes sense. If you do make a payment and can make it by credit card you will be better protected if it is a scam operation trying to capitalize on the debt. Sometimes agencies don’t give you that option. In any event demand the settlement in writing.

    As for the FDCPA, it governs third party debt collectors (not the original creditors), but it does allow for some collection activities. The law really sets out the and scope for those practices and places limitations on what crosses the line. This link is accurate–http://www.nolo.com/legal-encyclopedia/illegal-debt-collection-practices.html.

    Hope this helps!

    • Reply Ashley |

      Thank you so much for your detailed reply! I called the collection agency (from the number on my monthly statement/bill) and you were right that it was a case of “right hand not talking to the left.” They were able to verify, though, that the call DID originate from them. It was kind of odd, because the person I spoke with was great. I told him about the earlier person getting kind of cold and rude and he profusely apologized and said it would be reported. He said they’d be happy to write up whatever documentation I wanted, they were willing to work with me, etc. Just a generally “pleasant” experience in comparison to the earlier call. Here’s my question now – once I get written documentation of everything I’ve requested (we changed some things; making 3 separate payments instead of 1 lump sum, etc.),…..would you think it’s okay to pay how I have been in the past? All of my payments have been electronic. So I’m not providing them with access to my account, per se, but I’m sending payments directly from my account (as opposed to getting a certified check, etc.). Do you (or other readers) think that’s okay??

      • Reply Maureen |

        I am glad that they were more pleasant this time! In my experience if you take initiative they usually change the tone (if there was some) because after all they are in the business of making money. In most of these situations the collection agency keeps 30-45% of any recover less admin costs and then passes the rest onto “its client,” the original creditor.

        Once you have received the settlement terms in writing it should be okay to make payments the same way you have been doing so. I would suggest printing a screen shot at the time you make the payment in case it does not process correctly and they argue you missed a deadline under the agreement (I have had this happen to clients). Again, don’t make another payment until you have the settlement in writing! I have seen it all with collection agencies. I am curious who it is 🙂 I have dealt with hundreds, but there are a few on my “regular” list. Some are better than others.

  • Reply Christopher |

    Offer than $2,500. If they want to close it and get if it off their books, they will accept it. You have the upper hand, don’t lose it.

  • Reply Jay |

    My first question would be about the $25 minimum. Does the statement say that $25 minimum payment is due, did the medical office give you that number, or is it just an arbitrary amount on your part? That would be important. If it is in the statement then you are fulfilling your obligation.

    Note that if you settle a debt, it most likely will go on your credit report as a debt settled for less than full amount. Not as bad as a true write off, but it will ding you.

    • Reply Ashley |

      Meh. Good thing I don’t really care about my credit right now (lol). I needed it to be good for the mortgage, but now that I’m not going to be doing the student loan consolidation I don’t anticipate needing to establish any new lines of credit in the foreseeable future. I’d rather take the ding in exchange for the savings of nearly $2,000 from this debt!!

  • Reply Ashley |

    And, update (and question) for anyone:

    My updated written correspondence (pdf sent via email, on corporate letterhead, etc.) now states:

    “Our client has agreed to accept a total of $3647.15 as full settlement of your account(s) listed below if in our office by 4/18/17. We have agreed to accept the payments in 3 installations of $1215.71.”

    (the account information listed was all accurate)

    This sounds reasonable to me. I can make payments how I like (no longer have to be “over the phone” as was written in the first letter), and will do so in 3 months: February, March, and April. The plan is to send the payments early in the month – then this debt will be gone by the deadline (4/18/17).

    Anyone feel like there’s anything else I need to look into? I’ve verified the debt, etc. Looked up ratings of this collection agency, etc. Everything seems very legitimate to me but you all kind of got me freaked out regarding the scam allegations (which, I’m confident it’s not at this point.). But any additional due diligence or any other recommendations before I send a payment?? Does this letter seem sufficient?

  • Reply Maureen |

    That is a 35% off settlement. That is pretty standard in the industry. Anything above 50% would be a great settlement, but for those many will want to verify income and expenses. Those are not details you want to provide!

    The letter should be sufficient. I would send the last payment a few days before the due date to ensure it is processed on time.

  • Reply Meg |

    Bet you will be glad to be done with this bill!

    I am surprised Dave Ramsey has said medical providers won’t reduce their
    bills because that has not been my experience. I had surgery 2 years ago. My surgeon must have been the 1st to submit his bill because I owed most of my big deductible to him. WIthout talking to anyone there, I paid a
    few hundred to them and paid all the smaller bills in full know that by the next month I would have enough in my HSA to pay in full. Instead surgeon’s office called and offered to reduce the bill if I paid in full. Saved me several hundred dollars.

  • Reply Sarah |

    Awesome…glad one more debt will be gone and you are saving on top of that! Big Win!

So, what do you think ?