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For larger facilities it could mean that you've been placed to their internal collection department but for the most part it means that your account has been sent to a third party collection agency or collection attorney.  A collection notice from a third party service would obviously be from a different entity and should include a number of disclosures as required by Federal Law.  If you receive a call advising that you have been placed to collection you can simply ask if you are dealing with an internal collection department or a third party service as Federal Law prohibits all entities from making false and misleading statements in connection with the collection of a debt.

The General difference from one entity to the next is as follows:

Internal Collection Departments - They usually do not file law suits directly, rarely report directly to a credit bureau but they do have more latitude in what they can do as they are exempt from most Federal Collection Laws

Collection Agencies - Rarely file law suit against you directly but many (including ours) will list debts with a credit bureau and most refer accounts to outside law firms when legal action is warranted

Collection Attorneys - Rarely list directly with credit bureaus but obviously have the resources to begin legal action against you sooner than the other entities

Collection Agencies and Collection Attorneys being true third parties to the debt must follow strict Federal Collection Guidelines

1. Don't panic!

The collection service is required to and wants to contact you BEFORE any severe collection action has been taken.  So there's a very good chance that no damage has been done, as of yet.

2. Respond!

We take the data provided to us by our client and run it through a number of information services in an attempt contact you BEFORE lasting damage occurs but our efforts are frequently ignored.  The situation will not go away without action on your part and don't assume that someone else is handling this for you.  It's your credit and your reputation that's at stake.

3. Don't shoot the messenger!

The process of dealing with an illness or injury to yourself or a loved one can be quite daunting and overwhelming.  Couple that with the bills that follow and you have the recipe for pure frustration and anger.  We understand, sympathize and empathize with your situation.  However, we did not cause the situation to occur, did not receive or recommend the services rendered, did not dictate the terms of payment and we certainly did not go to our client's office and place your account into collection with our agency.  Our job is to provide information to you in professional and courteous manner, while working within the guidelines of the laws that govern our business activities.  The agency can help you to resolve this matter, use them as a resource and not as an outlet to vent your anger.  (See using the Collection Agency as a resource below)

This is usually the first thing we hear when someone contacts our office.  However, if you call ANY insurance carrier the first thing you're likely to hear is some sort of disclaimer stating that insurance coverage is not a guarantee of payment and in most cases the responsibility for payment falls back on to the patient or their parents if the patient is a minor.

Generally speaking:

For In-network providers you are responsible for fees as stated on your explanation of benefits by your insurance carrier, such as deductibles, co-pays, non-covered services, etc.

For out of network providers you are responsible for ALL fees not covered by any insurance coverage irrespective of what your carrier states and it is your responsibility to confirm network participation and follow any rules set forth by your insurance carrier when obtaining service from an out of network provider. (See the "Insurance Tips" page for a more detailed look at health care insurance)

Each spouse is equally responsible for the debts of the other and the debts of a minor child according to the common law doctrine "The Law of Necessities".  This is true in the case of a minor child even if the parents are divorced and the divorce decree state one or the other parent as fully responsible.  The bill becomes a private civil matter between the parents but the medical provider is not held to the decree and may pursue each parent individually.

A trip to a hospital emergency room can generate many different bills and an extended period of treatment at a physical therapy center will generate bills for many dates of service.  The most important thing is to find out EXACTLY what you are being billed for.  Is it a hospital bill?  Is it for a specialist that was called in, etc.  Get your paperwork together and call the collection service.  They MUST provide you with specifics about the service and if at that time you have documentation that shows the bill as paid get it to them ASAP.  Billing errors do occur and a reputable agency does not want to waste your time or theirs trying to collect on bills that are already paid!

In certain instances medical bills are as a result of an automobile accident, slip and fall accident, animal bite, etc.  Some medical providers treat these patients and forestall collection on the balances not covered by insurance based upon a lien or "letter of protection" against the proceeds of a law suit the patient has against that party that caused the injury.  That's all well and good if the personal injury attorney and medical provider have such an understanding.  However, what most patients don't know is that not all medical providers accept such agreements and they can end up in collection even if they have an active suit.  Personal injury attorneys frequently tell their clients not to pay the bills and that's unfortunate because they are not damaged by the collection action, the patient is.  The bottom line is that if the bill is to paid at the end of the suit (whether or not you are successful, as the lien does not relieve you of responsibility for the bill if you fail to win your case) you are better off paying the bill before collection action is taken against you.

The Statute of Limitation varies from State to State and covers quite a long time period.  For instance, in New Jersey you have 6 years from the date of last service or payment and that applies only to the filing of suit.  If a medical provider has a bill and does not at any time consider the bill as delinquent they can pursue the debt beyond the 6 year limit so long as they don't attempt legal action.

If you do not resolve the bill and the debt meets the criteria to be reported to the credit bureau, the debt may be listed with a credit bureau when it is reporting eligible as an "OPEN COLLECTION ACCOUNT" and remain as part of your personal credit record for up to 7 years! 

Not exactly ruin, but it is certainly not a good thing.  An open collection account on your credit report will most likely cause a drop in credit score that may affect your ability to obtain credit and increase the cost of credit for the time period that the listing shows on your report.  For Example, automobile ads on TV frequently mention special offers "for very well qualified customers".  Those offers are based upon credit score and if the collection listing knocks you down out of the category of "very well qualified", you may still be able to lease or buy the car, but your interest rate will be higher, thereby costing you more money to lease or purchase that vehicle.  Another example would be, when applying for a credit card a person with a higher score could get a better interest rate and higher credit limit than someone with a reduced score.  (See the Credit Score section on the "Protect Your Credit" page for more information).  What happens when you pay off a medical bill in full that shows on your credit report?  It was the case for many years that the listing was not deleted unless full payment was made by your insurance carrier, the listing was updated to a paid collection account.  There is good news in that respect, effective 07/01/2022, the three major credit bureaus will completely remove paid in full medical collection accounts from consumer’s credit reports.

Based upon the dollar amount of your bill, your account will be reviewed for legal action.  If your account is forwarded to an attorney they will attempt to obtain a judgment against you for the original amount of the debt plus court costs, interest and attorney fees as allowed by law.  This could result in a substantial increase in the amount of your bill.  If a judgment is obtained the attorney could file for a wage execution to extract money directly from your employer and/or docket the judgment to act as lien against real property.  As you can see, this is not a pleasant process and is done only as a last resort when the debt can not be resolved in a more amicable manner.

Most people have negative associations attached to collection agencies and don't realize that they can be a valuable resource.  The agency usually has intimate knowledge of the industry as a whole, the client's billing and collection practices, easier access to a contact person at the client's office and a strong incentive to resolve your matter.  A skilled and reputable agency can help you handle insurance situations with advice on who to call or what to do based upon how we've helped others resolve similar situations.  We can also give you general credit advice and can give you detailed information on your payment options.

Please keep in mind that a collection agency can not give you legal advice or advice that could be detrimental to their client's best interest.


This is without doubt, the number one myth in the collection business and it is ABSOLUTELY not true.  If the creditor allows the debtor to pay their bill in installments, it is done so as a courtesy and on their terms.  Countless debtors have had their credit affected and legal action taken against them because they believed that such action could not be taken so long as they made some kind of payment each month.


There are "collection proof" people with no assets, no job, that don't care about their credit rating and therefore there's not much that can be done to compel them to pay a debt.  These people typically are not the ones that make this statement because they rarely ever respond to our collection efforts.  The people that usually make this statement are people that have decent jobs and maybe even own a home and are going through financial difficulties.  In that they are having problems paying existing debts they can't imagine how they'd be able to pay for an additional debt.  However,  if the creditor has placed your account into collection they want to get paid and the bill is not going to just go away.  Failure to address the matter could cause damage to credit that you may desperately need in the near future.  Also, legal action could result in a judgment with added fees that could cause an involuntary deduction from your paycheck each pay period!  Calling the collection service and honestly stating your financial situation with a sincere attempt to resolve the debt could save you from credit problems and legal action.  The agency is likely to work with you if their research corroborates your story.


This one stems from misinformation regarding Federal medical privacy and credit laws.  Federal credit law requires a collection agency to list the original creditor's name when a debt is sent to the credit bureau.  However, listing the original creditor's name when the services were health care related conflicted with standards set forth by Federal medical privacy laws.  The end result is that medical debts may still be reported to the credit bureaus but the name of the original creditor is now shown as "Medical Payment Data" to any third party that views your report.  When you obtain your report directly, the actual name of the medical provider will be shown.


Credit counseling services charge you a fee and attempt to charge the creditors a fee to "manage" your debts.  Our agency has NEVER stopped collection action against a debtor due to the intervention of a credit counseling service.  In fact, there have been a number of cases where the debtor dropped out of the program and was able to resolve their debt with us directly under more favorable terms.  The payments they propose are usually so small that there is no benefit to the agency or their client to accept such a plan.  Also, if you are having problems paying your existing bills it doesn't make much sense to add their bill to the pile.


Books and web sites that claim they can teach you to "Stop Collectors in their Tracks" are all over the place and there is some truth to what they say.  What they don't say is that the advice they give is usually taken out of context and doesn't illustrate the ramifications of those actions.  For instance, the first thing they usually tell you is that Federal Law allows for a debtor to ask the collection agency to cease all communication and they must honor that request.  Sounds like a good thing,  no more letters, no more phone calls, your collection problem has been solved.  Unfortunately it's not that easy.  If the agency can no longer contact you to attempt to resolve the debt the only option they have left is to take additional action against you, like damaging your credit and placing your account to an attorney for legal action.  If we receive a request to cease communication we of course abide by it but that account IMMEDIATELY becomes eligible for credit reporting and is reviewed for legal action.  Your attempt to "STOP" the collection action may actually result in speeding up the process.


There is a lot of misinformation about what MUST be done before placing an account to a third party collection agency.  The truth of the matter is that there are no real laws or regulations regarding how long the original creditor MUST wait and the actions they MUST take before sending an account to collection.  We frequently hear statements like, you can not send me to collection before XXX # of days and you must send a final notice certified mail, etc. etc.  This is simply not true.  The original creditor may send your account to collection when they feel the action is necessary to protect their interest regardless of age and internal handling.

The content of this page is for informational purposes only and is not intended to serve as legal advice.  Further, the content of this page covers the handling of debt collection matters in our area of specialization based upon our practices and procedures in general and may vary with other agencies as well as with specific situations within our own agency.