Debt collection agencies must follow federal rules when contacting individuals about unpaid bills. As noted by the Consumer Financial Protection Bureau, some collectors may also not find it worthwhile to mail notices for outstanding bills worth small dollar amounts.
The Federal Register’s website notes a change beginning in late 2021. According to Regulation F of the Debt Collection Practices, instead of sending letters, bill collectors may notify the credit reporting agencies of smaller debts. Collectors may then expect debtors to contact them when they find the information on their credit reports.
When collection agents may report medical bills
The CFPB changed its rules requiring collectors to send debtors validation notices. A letter validating an unpaid debt must describe the amount an individual owes. It must also advise a debtor of the right to contest the bill within 30 days.
As reported by Kiplinger’s Personal Finance, federal law requires bill collectors to wait at least 180 days before reporting unpaid medical debts. The delay may give debtors additional time to contact their health insurance companies and dispute a bill. Some individuals may also work out a payment arrangement with a hospital or provider.
When credit bureaus must remove negative information
An insurance company may settle an unpaid medical bill late. The credit reporting agencies must then remove negative information that a collector reported about the debt. Some lenders may also use an updated scoring model. In the case of debts paid off after collections, they may not affect an individual’s credit rating.
Medical debt collection agents generally follow the same rules as they do for contacting individuals about unpaid credit card bills. Collectors waiting 180 days before notifying credit reporting bureaus may provide an advantage. Struggling individuals may have more time to consider options such as entering a payment plan or filing for bankruptcy.