Medical debt follows a predictable path, but the timeline and consequences depend on who you owe and how long you wait

If you stop paying medical bills, the provider or hospital will first send you notices and letters. After 60 to 90 days of non-payment, they typically sell the debt to a collection agency. The collection agency then reports the account to the three credit bureaus — Equifax, Experian, and TransUnion — which damages your credit score. If you ignore collection calls and letters for six months to a year, the collector may file a lawsuit in your state's civil court. If they win, they can garnish your wages, freeze your bank account, or place a lien on your home, depending on your state's laws. Medical debt is the leading cause of personal bankruptcy in the United States.

The process is not when ready, and you have options at each stage. Hospitals and providers are required by law to work with uninsured and underinsured patients on payment plans before sending debt to collections. Collection agencies must follow the Fair Debt Collection Practices Act, which limits how often they can contact you and what they can say. You can dispute the debt if the bill is wrong, negotiate a settlement for less than you owe, or request a payment plan that fits your budget. Understanding where you are in this timeline and what your rights are determines whether you can stop the damage or reverse it.

Key Takeaways

  • Medical providers must offer payment plans before sending your debt to a collection agency, and you can request one at any time.
  • A collection account stays on your credit report for seven years from the date of first non-payment, even if you pay it later.
  • Collection agencies cannot contact you before 8 a.m. or after 9 p.m., cannot call your workplace if your employer forbids it, and must stop calling if you send a written cease-contact letter.
  • If a collector sues and wins, the judgment allows them to garnish wages or freeze bank accounts in most states, but some states protect a portion of your income and assets.
  • Settling a debt for less than the full amount stops collection calls but does not remove the account from your credit report.

The first 90 days: when the provider still owns the debt

When you miss a medical bill payment, the provider's billing department sends a statement marked "past due" within 30 days. Most hospitals and large providers are required by federal law to inform you of financial hardship programs and payment plan options before they escalate the account. This is your best window to act. Call the billing department directly and ask for the financial counselor or patient advocate — do not wait for a second notice.

If you have income but cannot pay the full bill at once, request a payment plan. Hospitals must offer these to patients who cannot pay in full, and the plan is interest-free. You can usually pay over 12 to 36 months depending on the amount owed. If you have very low income, ask about charity care or financial hardship programs — many hospitals write off bills for patients below a certain income threshold, and some states require hospitals to do so. Get any agreement in writing, including the monthly amount, due date, and what happens if you miss a payment.

If you ignore the bills during this period, the provider will send the account to a collection agency around day 90. Once that happens, you are no longer dealing with the hospital — you are dealing with a third party that bought the right to collect from you.

After 90 days: the collection agency takes over

When a collection agency receives your account, they report it to the credit bureaus within 30 to 60 days. This report includes the original balance, the date you first missed a payment, and the date the agency received the account. Your credit score typically drops 50 to 100 points or more, depending on your current score and credit history. The damage is when ready and visible to anyone who pulls your credit — lenders, landlords, employers in some fields, and insurance companies.

The collection agency will contact you by phone, mail, and sometimes email. Under the Fair Debt Collection Practices Act, they cannot call before 8 a.m. or after 9 p.m. in your time zone. They cannot call your workplace if you tell them your employer forbids personal calls. They cannot threaten you, use profanity, or claim they will have you arrested — medical debt is a civil matter, not a criminal one. If you send them a written letter asking them to stop contacting you, they must stop, though they can still sue you.

You have the right to dispute the debt in writing within 30 days of their first contact. Send a letter to the collection agency's address (on the notice they sent you) stating that you dispute the debt and asking them to verify it. They must then prove the debt is valid before they can continue collection efforts. If the bill contains errors — wrong amount, charges you do not recognize, or services you did not receive — dispute it when ready.

Negotiating or settling before a lawsuit

If you cannot pay the full amount, you can negotiate a settlement. Collection agencies often buy medical debt for 5 to 15 cents on the dollar, so they have room to accept less than what you owe. Call the agency and ask if they will settle for a lump sum — typically 30 to 50 percent of the balance. Get the settlement offer in writing before you pay anything. The letter should state the amount you are paying, the date payment is due, and that the account will be marked "settled" or "paid in full" once you pay.

If you cannot pay a lump sum, ask about a payment plan. Some agencies will accept monthly payments to settle the debt, though this is less common than lump-sum settlements. Again, get the agreement in writing.

Settling the debt stops the collection calls and prevents a lawsuit, but it does not remove the account from your credit report. The account will show as "settled" or "paid" rather than "unpaid," which is better for your credit than an active collection account, but the damage remains for seven years from the original missed payment date.

If the collector sues: wage garnishment and bank levies

If you do not pay or settle, the collection agency may file a lawsuit in civil court, usually after six months to a year of non-payment. You will receive a summons and complaint — official court documents telling you when and where to appear. If you ignore the summons, the collector wins by default, and the court issues a judgment against you. A judgment is a court order that says you owe the debt and the collector can enforce it.

With a judgment, the collector can garnish your wages — the court orders your employer to send a portion of your paycheck to the collector. The amount varies by state: some allow garnishment of up to 25 percent of your disposable income, while others cap it at 10 percent. Some states protect certain income sources entirely, such as Social Security or disability payments. A few states do not allow wage garnishment for medical debt at all.

The collector can also freeze your bank account and take money directly, a process called a levy. They can place a lien on your home, which means they have a legal claim against the property. If you sell the home, the lien must be paid from the sale proceeds before you receive anything. A lien does not force you to sell, but it complicates refinancing or taking out a home equity loan.

If you receive a summons, respond to it — even if you cannot afford to pay the full debt. Show up in court or file a written response. Some states allow you to request a payment plan as part of the court process, which stops the garnishment. Others have rules about how much income is protected from garnishment. An attorney or your local legal aid office can tell you what your state allows.

How medical debt affects your credit and borrowing

A collection account on your credit report lowers your score and stays there for seven years from the date you first missed the payment — not from the date the collection agency received it or the date you settled it. During those seven years, you will find it harder to get approved for credit cards, car loans, mortgages, and rental housing. Interest rates on loans you do get approved for will be higher. Some employers and insurance companies check credit reports, and a collection account can affect your process.

The impact on your score decreases over time. A collection account from five years ago hurts less than one from last month. If you settle the debt, the account will show as "settled" or "paid," which is better than "unpaid," but the account itself remains visible. Some collection agencies will agree to remove the account from your credit report in exchange for payment — this is called "pay for delete" — but it is not common and must be requested in writing before you pay.

Medical debt is treated the same as other debt on your credit report, though some scoring models (like FICO 9 and newer versions) give medical debt slightly less weight than credit card or loan debt. This means a medical collection account hurts your score, but not quite as much as a credit card collection account of the same size.

State laws that protect you from collection

Your state's laws determine how much of your income and assets are protected from garnishment and levy. Some states protect a portion of your wages — for example, Texas protects 75 percent of your disposable income from garnishment, while other states allow collectors to take up to 25 percent. Some states protect certain types of income entirely: Social Security, unemployment benefits, disability payments, and pension income are usually protected in most states, though the collector must know you receive them.

A few states do not allow wage garnishment for medical debt at all. North Carolina, South Carolina, and Pennsylvania have strong protections against garnishment for medical debt specifically. If you live in one of these states, a collector can still sue and win a judgment, but they cannot garnish your wages. They can still place a lien on your home or freeze your bank account in some cases.

Look up your state's garnishment laws on your state attorney general's website or contact your local legal aid office. Knowing what is protected helps you decide whether to negotiate, settle, or respond to a lawsuit.

Bankruptcy as a last resort

If medical debt is overwhelming and you have little income or assets, bankruptcy may be an option. Chapter 7 bankruptcy eliminates unsecured debt like medical bills entirely — you do not have to pay it back. Chapter 13 bankruptcy creates a repayment plan over three to five years, usually paying a portion of what you owe. Bankruptcy stops collection calls and lawsuits when ready through an automatic stay, a court order that freezes all collection activity.

Bankruptcy damages your credit score significantly and stays on your credit report for seven to ten years, but it stops the cycle of collection calls, wage garnishment, and liens. It also stops interest and late fees from accumulating. If you are considering bankruptcy, consult a bankruptcy attorney — many offer free consultations. If you cannot afford an attorney, contact your local legal aid office.

Frequently Asked Questions

Can a hospital send my medical debt to collections without offering a payment plan first?

No. Hospitals and large providers are required by federal law to inform you of financial hardship programs and payment plan options before sending your account to collections. If they did not offer this, you can dispute the debt or file a complaint with your state's attorney general. However, smaller medical practices and some providers may not follow this rule, so contact them when ready if you receive a collection notice.

What should I do if a collection agency keeps calling after I asked them to stop?

Send them a written cease-contact letter by certified mail stating that you are requesting they stop contacting you. Keep a copy for your records. Once they receive it, they can only contact you to confirm they received the letter or to tell you they are taking legal action. If they continue calling after that, document the calls and file a complaint with the Consumer Financial Protection Bureau or your state's attorney general.

If I pay a medical collection account, does it come off my credit report?

No. Paying a collection account stops the collector from suing or calling you, and the account will show as "paid" instead of "unpaid," which helps your credit slightly. But the account itself remains on your credit report for seven years from the original missed payment date. You can ask the collector to remove it in exchange for payment, but they are not required to agree.

Can I be arrested for not paying medical bills?

No. Medical debt is a civil matter, not a criminal one. Collectors cannot threaten you with arrest, and no one can go to jail for owing medical bills. If a collector threatens arrest, that is a violation of the Fair Debt Collection Practices Act, and you can file a complaint with the Consumer Financial Protection Bureau.

What happens to medical debt if I move to a different state?

The debt follows you. A collection agency can sue you in your new state's courts, and the judgment is enforceable there. However, your new state's garnishment and asset protection laws explore, not your old state's. If you move to a state with stronger protections against garnishment, those protections explore to any future judgment against you.