Medical Debt in Collections? Your Rights and How to Fight Back

When you receive a collection letter for medical debt, your first instinct may be to pay it immediately to make it go away. Do not do that yet. Here is why:

• The debt may not be valid. Medical billing errors are extremely common — up to 80% of bills contain errors. A debt that was incorrectly calculated, sent to collections in error, or for services you never received is not a valid debt.
• You may qualify for charity care. If the original provider is a nonprofit hospital, they are legally required to have a financial assistance program under IRS Section 501(r). You may be able to get the debt reduced or eliminated retroactively.
• The statute of limitations may have expired. Every state has a statute of limitations on debt collection — typically 3-6 years. If the debt is past the statute of limitations, the collector cannot sue you to collect it (though they can still ask for payment).
• Paying can restart the clock. In some states, making a payment on time-barred debt can restart the statute of limitations, giving the collector the legal right to sue you again.

Under the Fair Debt Collection Practices Act (FDCPA), you have the right to demand that a debt collector prove the debt is valid and that they have the legal right to collect it. This is called “debt validation.”

Within 30 days of receiving the first collection notice, send a written debt validation letter via certified mail requesting:

The Fair Debt Collection Practices Act gives you specific protections against abusive, deceptive, and unfair collection practices. Collectors violate the FDCPA more often than most people realize. Here are your key rights:

Major changes to how medical debt is reported on credit scores took effect in 2023, and more may be coming. Here is the current state:

If medical debt is incorrectly appearing on your credit report (paid debt, debt under $500, or debt reported before the 365-day window), you have the right to dispute it directly with the credit bureau. File a dispute online with each bureau that is reporting the inaccurate information. Under the Fair Credit Reporting Act (FCRA), the bureau has 30 days to investigate and correct the error.

If your medical debt originated at a nonprofit hospital — and about 57% of US hospitals are nonprofit — the hospital is legally required to have a Financial Assistance Policy (FAP) under IRS Section 501(r). This is commonly called “charity care.”

Here is why this matters even after the debt goes to collections:

• Retroactive eligibility. Under 501(r), the hospital must accept and process financial assistance applications at least 240 days after the first billing statement. Even if the debt is already in collections, you may be able to apply for charity care with the original hospital and get the debt reduced or eliminated.
• Income-based eligibility. Most hospital FAPs provide free care for patients with incomes below 200% of the Federal Poverty Level (about $30,120 for a single person in 2024) and discounted care for incomes up to 300-400% FPL. Many people who qualify do not know these programs exist.
• 501(r) violations. If a nonprofit hospital sent your bill to collections without first screening you for financial assistance, without notifying you of their FAP, or while your application was pending, they may have violated 501(r). These violations can be reported to the IRS and to your state attorney general.

To find out if your hospital is a 501(c)(3) nonprofit, search for the hospital on the IRS Tax Exempt Organization Search tool (apps.irs.gov/app/eos). Then contact the hospital directly and ask for their Financial Assistance Application.

Every state has a statute of limitations that limits how long a creditor can sue you to collect a debt. For medical debt, this is typically governed by the statute of limitations for written contracts or open accounts, which varies by state — usually 3 to 6 years from the date of last activity on the account.

Key things to know about the statute of limitations:

• Once the statute expires, the collector cannot sue you — but they can still try to collect by phone or letter. This is called “time-barred” debt.
• In some states, making any payment — even a small one — on time-barred debt can restart the statute of limitations. Be careful about making partial payments on old debt without understanding your state's rules.
• If a collector sues you for time-barred debt, you must raise the expired statute of limitations as a defense in court — it is not automatic. If you do not show up or do not raise the defense, the collector can still get a judgment.
• Under the CFPB's Regulation F, debt collectors are prohibited from suing or threatening to sue on debt they know (or should know) is time-barred. If a collector does this, it is an FDCPA violation.

Debt collectors violate the FDCPA frequently. If a collector does any of the following, document it — you may be entitled to statutory damages of up to $1,000 per lawsuit, plus actual damages and attorney fees: