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Should I let my medical bills go to collections?

May 29, 2012: 2:11 PM ET

Before and after my son's birth in 2010, I racked up medical bills I couldn't pay at the time. At first I was on a payment plan, but then I ran into some financial difficulties and I fell behind. I made partial payments but couldn't make full payments. Now I'm being asked to pay the amount I missed in full, or the balance will go to collections. Should I let the bill go to collections and see if I can get a more flexible payment plan?
-- Name withheld

Letting your medical bills go into collections is not your best move. Your credit might not even be affected by this debt now, but it will be if you let it go to collections. "Medical debt is rarely reported to the bureau until it is charged off and sold to a collection agency," says Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling. "This means that even though you're currently delinquent with the provider, it has probably not been reported, so your credit isn't tarnished."

Once it goes to collections and dings your credit report, it will be there for seven years, making credit more difficult to obtain. Mortgages, car loans, additional credit cards — you'd probably pay a higher rate on all of those if you apply for them after this. Having the debt on your credit report could also affect insurance rates and employment, since employers often check credit before hiring.

Your best bet is to keep trying to work out a better plan with the provider. Explain, in detail, why you can't pay what they want you to pay. If necessary, lay out your finances for them. Help them see that you absolutely do not have the extra money lying around, but that you could manage a different payment plan, and pay that on time. "The last thing you want to do is promise to pay an amount that you can't responsibly make long-term," Cunningham says.

— Kate Ashford

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