Collections

Collections defense

A collector changes the rules in the user's favor more than they fear: the FDCPA applies, the debt was likely acquired at a steep discount, and nonprofit-hospital debts carry 501(r) obligations that survive the transfer. Legal detail: knowledge/rights-and-laws.md §4–5.

Triage (minutes matter on the first one)

1. Date of first contact? The user has 30 days from the collector's initial notice to demand validation with full effect. Inside the window → validation letter goes out today, certified mail (send-letter, templates/letters/debt-validation.md).

2. Is it a summons? Court papers ≠ collection letter. Answer-by date, legal aid (lawhelp.org), everything else pauses. Never let a user default — the default rate in medical debt lawsuits is over 90%, and default judgment is how a negotiable bill becomes wage garnishment. The single most important act is filing a written answer with the court before the deadline. It doesn't need to be elaborate — a general denial disputing the amount claimed and demanding the plaintiff produce complete documentation of the original debt (itemized billing records and proof of assignment) turns a default into a contested case. Contested cases require preparation; preparation costs more than a typical medical debt is worth, which is why answered cases so often settle or get dropped. Route the user to their court's self-help center or state answer form (most states have fill-in-the-blank versions) plus legal aid — the agent drafts supporting content but the user files, and court procedure is state-specific.

   The one-folder defense. If it goes to a hearing, prepare a single folder: itemized bill, medical records, the EOB, the financial assistance application + the hospital's written acknowledgment of receipt, and the hospital's own charity-care policy with the user's eligibility highlighted. Collection attorneys file expecting a no-show; documented FAP eligibility that was never properly determined (a 501(r) problem for the hospital) frequently ends in dismissal or immediate settlement.

3. Original provider a nonprofit hospital? The 240-day FAP window may still be open — an assistance application can pull the debt back entirely (financial-assistance). Also consider asking the provider to recall the debt, especially if a dispute or application was pending when they referred it.

Validation and dispute

The validation letter demands: proof the collector owns/works the debt, an itemized accounting from the original provider, and the original creditor's name. Until they respond, they must pause collection. Many collectors can't produce medical itemization — cases die here.

While disputing, the user talks to collectors ONLY in writing where possible. If they call: phone-prep with the collector-specific do-not lines (never confirm the debt, never make a "good-faith payment" — in many states partial payment restarts the statute of limitations, never give bank details).

Moving states mid-dispute

Medical debt follows an interstate move, but the rules change: the debt itself is generally governed by the state where care was delivered, while collection conduct and protections follow the user's new state (several states now cap interest, restrict garnishment, or ban credit reporting for medical debt — check the new state in rights-and-laws.md §5). Before/at the move: send written address updates to every provider and collector (courts put the duty to stay reachable on the debtor — a bill lost to mail forwarding is still a bill), and request written account status on every open account so there's a dated snapshot.

Credit reports

• Paid medical collections must be deleted under the bureaus' voluntary policy; medical debt under $500 isn't reported; there's a 1-year wait before any medical debt appears. Fifteen states ban medical-debt reporting outright — check the list in rights-and-laws.md §5.
• If it's on the report wrongly (paid, <$500, disputed, too old, re-aged): dispute with each bureau (annualcreditreport.com → dispute portals) and cite the specific policy/state law. CFPB complaint as the escalation rung.

Settling with a collector

Benchmarks still apply — but the anchor drops: collectors often accept 30–50% of face value, less for old debt. Rules: settlement agreement in writing before any payment, wording "payment in full satisfaction of this debt," pay by check/money order (never bank access), and the agreement must state how they'll report it (deletion or "paid in full" — not "settled"). Get the user's approval on the number before it's ever spoken aloud.