If you ignore medical bills, the provider’s billing office will chase the balance for about 90 days, then hand or sell the account to a collection agency; after roughly a year the debt can land on your credit report, and if a collector decides to sue and you don’t respond, a court can enter a judgment that lets them garnish your wages or levy your bank account. Every stage has a way out, but your options narrow quickly the longer you wait.
The Provider’s First 90 Days
Hospitals and physician offices run unpaid balances through a standard aging process: current, overdue, delinquent. During the first 30 days, you get reminders by mail or through the patient portal, and any early-pay discount the provider offered typically disappears once the bill ages past a month.
Between 30 and 60 days, the tone changes. Late fees or interest may attach, calls and letters pick up, and a “final notice” warns that the account will be sent to collections. If nothing happens by day 90, the provider concludes internal collection has failed and prepares to hand the balance off.
This window is where you have the most leverage. Providers would rather collect part of a bill than sell it to a debt buyer for pennies. A lump-sum offer around 50% of the balance is a common starting point, and interest-free payment plans of 12 months or longer are widely available if you ask before the account leaves the billing office.
When the Bill Moves to a Collection Agency
Once the provider gives up, it either assigns the account to a collection agency or sells it outright to a debt buyer. At that point the federal Fair Debt Collection Practices Act applies, because the FDCPA governs third-party collectors rather than the original creditor.1Legal Information Institute. Fair Debt Collection Practices Act
Within five days of first contacting you, the collector must send a written validation notice that identifies the amount, the creditor, and your right to dispute the debt in writing within 30 days.2Office of the Law Revision Counsel. 15 U.S. Code 1692g – Validation of Debts3Consumer Financial Protection Bureau. 12 CFR 1006.34 – Notice for Validation of Debts If you dispute in that window, the collector has to stop collection until it verifies the debt with something like an itemized bill or a copy of the original agreement. Disputing is free, and it forces the collector to prove its records are accurate.
Collectors cannot call before 8:00 a.m. or after 9:00 p.m. in your local time zone. A written request to stop contact ends the calls and letters, though the collector can still send a final notice that it intends to take a specific action such as filing suit. Stopping contact does not erase the debt.
Because a debt buyer paid a fraction of the face value, it often has room to settle. Offers of 20% to 50% of the balance are not unusual once the account has changed hands.
How It Shows Up on Your Credit Report
The three national credit bureaus adopted voluntary rules in 2022 that still govern medical collections in 2026. Nothing appears on your credit report for a full year after the debt goes to collections, which gives you time to fight the bill, wait on insurance, or arrange payment. Medical debts with an original balance under $500 are not reported at all, and paid medical collections are removed from credit files entirely.
The Consumer Financial Protection Bureau finalized a rule in 2024 that would have banned medical debt from credit reports outright. That rule never took effect. A federal court vacated it in July 2025 at the joint request of the CFPB and the plaintiffs who had challenged it, so there is no federal ban.4Consumer Financial Protection Bureau. Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V)
About 14 states have passed their own laws restricting or banning medical debt on credit reports, and several more limit how and when it can be reported. Check with your state attorney general to see what applies where you live.
The practical result: if a medical debt over $500 is still unpaid after the one-year waiting period, and your state has no ban, the collection can appear on your credit report and lower your score. Paying or settling triggers removal under the current bureau policy, which is a faster credit recovery path than most other types of debt.
When a Collector Sues You
If the balance is large enough to justify the cost of litigation, the collector may file a civil suit. You will receive a summons and a copy of the complaint stating the amount claimed and your deadline to respond.5Legal Information Institute. Federal Rules of Civil Procedure Rule 4 – Summons
Ignoring the summons is the single biggest mistake at this stage. Miss the deadline and the court enters a default judgment for the collector, typically for the full amount plus interest and fees. Show up, even without a lawyer, and the outcome often changes. Debt buyers frequently lack complete records, and several defenses come up often:
- Lack of standing, where a debt buyer cannot produce the chain of sale proving it owns your specific account.
- An expired statute of limitations, raised as a defense to ask the court to dismiss.
- An incorrect amount, forcing the collector to prove principal, interest, and fees are accurate.
- Improper service under your state’s rules.
Even where no defense applies, appearing often produces a negotiated settlement for less than the full amount, and judges sometimes push the parties toward a payment arrangement instead of judgment.
Wage Garnishment, Bank Levies, and Property Liens
A judgment unlocks enforcement tools the collector did not have before. The most common is wage garnishment, where your employer diverts part of each paycheck to the creditor. Federal law caps garnishment at the lesser of 25% of your disposable earnings or the amount by which your weekly disposable earnings exceed $217.50, which is 30 times the $7.25 federal minimum wage.6Office of the Law Revision Counsel. 15 U.S. Code 1673 – Restriction on Garnishment If your disposable weekly income is $217.50 or less, your wages cannot be garnished at all.7U.S. Department of Labor. Fact Sheet 30: Wage Garnishment Protections of the Consumer Credit Protection Act Some states set lower caps, and a handful prohibit wage garnishment for consumer debt entirely.
A judgment creditor can also seek a bank levy to freeze and take money from your checking or savings account, or record a lien against real estate you own, which blocks you from selling or refinancing until the debt is paid.
How Long a Collector Can Sue You
Each state sets a statute of limitations for suing on a debt. For medical bills, that window runs from 3 to 10 years depending on the state and whether the debt is treated as a written contract or an open account. After it expires, the debt is time-barred.
A collector cannot sue or threaten to sue on a time-barred debt.8eCFR. 12 CFR 1006.26 – Collection of Time-Barred Debts But the statute of limitations is a defense you have to raise. If a collector files anyway and you don’t appear and assert it, a judge will not dismiss the case for you. Collectors can also keep contacting you about a time-barred debt through calls and letters.
Be careful with old debt. In many states, a partial payment or a written promise to pay restarts the statute of limitations clock and gives the collector a fresh window to sue.
Ways to Stop the Chain Before It Escalates
Before you pay or ignore any medical bill, confirm the amount is right. Billing errors are common. Request an itemized bill and compare each line against the services you received, then match it to your insurance explanation of benefits.
If the charge came from emergency care, or from an out-of-network doctor working at an in-network facility (such as an anesthesiologist you didn’t choose), the federal No Surprises Act may cap your responsibility at your in-network cost-sharing amount.9Office of the Law Revision Counsel. 42 U.S. Code 300gg-111 – Preventing Surprise Medical Bills10Centers for Medicare & Medicaid Services. No Surprises: Understand Your Rights Against Surprise Medical Bills Improper balance bills can be challenged through a federal independent dispute resolution process that runs between the insurer and provider without pulling you in.
Most nonprofit hospitals are required by Section 501(r) of the Internal Revenue Code to maintain a written financial assistance policy covering at least emergency and medically necessary care.11Internal Revenue Service. Financial Assistance Policies (FAPs) Patients who qualify cannot be charged more than the amounts the hospital typically bills insured patients for the same services.12eCFR. 26 CFR 1.501(r)-4 – Financial Assistance Policy and Emergency Medical Care Policy Income limits vary, but many programs cover patients up to 200% to 400% of the federal poverty level. Look for the policy on the hospital’s website or ask the billing department, and apply before the account goes to collections.
If nothing else works, bankruptcy can eliminate medical debt. Medical bills are unsecured and are generally dischargeable in Chapter 7, which permanently bars creditors from calling, suing, or garnishing on the discharged debts.13United States Courts. Discharge in Bankruptcy – Bankruptcy Basics A Chapter 7 filing stays on your credit report for 10 years, and you may have to surrender some assets depending on state exemption laws. Chapter 13 uses a three-to-five-year repayment plan and lets you keep more property. Talk to a bankruptcy attorney before filing, because the right chapter depends on your income, assets, and total debt.
Tax Bill on Forgiven Medical Debt
One consequence catches people who successfully negotiate. If you settle for less than the full amount, the IRS generally treats the forgiven portion as taxable income, and the collector may send you a Form 1099-C.14Internal Revenue Service. Topic No. 431, Canceled Debt – Is It Taxable or Not? If your total debts exceeded your total assets when the debt was forgiven, you can exclude the canceled amount up to the extent of that insolvency by filing IRS Form 982 with your return.15Internal Revenue Service. What If I Am Insolvent? Debt discharged in bankruptcy is also excluded. For a large settlement, a tax professional can tell you whether anything is owed at filing time.