The hospital will send your debt to a collection agency, which will contact you repeatedly and report the unpaid balance to credit bureaus, damaging your credit score for up to seven years

If you stop paying a hospital bill, the hospital itself will pursue the debt for a period — usually 60 to 180 days depending on the hospital's policy. During this time, you'll receive statements and calls from the hospital's billing department. After that window closes, the hospital typically sells the debt to a collection agency, a company that buys unpaid medical debts and tries to recover them.

Once a collection agency owns your debt, they can contact you by phone, mail, and email. They can also sue you in civil court to obtain a judgment, which allows them to garnish your wages or place a lien on your property. The debt will appear on your credit report as a collection account, which significantly lowers your credit score and remains there for seven years from the date you first missed the payment — even if you pay it later.

Key Takeaways

  • Hospital bills typically go to a collection agency 60 to 180 days after you stop paying, and the agency can then sue you, garnish wages, or place a lien on property.
  • A collection account on your credit report lowers your score and stays for seven years, affecting your ability to borrow money at reasonable rates.
  • Hospitals often have financial hardship programs or payment plans that can reduce or eliminate what you owe, and these exist before debt goes to collections.
  • Paying a collection agency does not remove the account from your credit report, though it may change the status to "paid" and stop further collection calls.
  • If a collection agency sues you, you have the right to respond in court and challenge the debt if the amount or your responsibility is incorrect.

How collection agencies contact you and what they can legally do

Collection agencies must follow the Fair Debt Collection Practices Act (FDCPA), a federal law that limits how and when they can contact you. They cannot call before 8 a.m. or after 9 p.m. in your time zone, cannot call your workplace if your employer forbids it, and cannot contact you at all if you send them a written request to stop. They also cannot threaten you, use profanity, or claim they will have you arrested — medical debt is a civil matter, not a criminal one.

However, collection agencies can and do sue. If they file a lawsuit and win a judgment, they can garnish your wages (taking a portion of your paycheck before you receive it), place a lien on your home or car, or freeze your bank account. The amount they can garnish varies by state; some states cap it at 25 percent of your disposable income, while others allow more. A lien means they have a legal claim on your property and can force a sale to recover the debt if you sell or refinance.

The impact on your credit score and borrowing

A collection account damages your credit in two ways. First, the unpaid bill itself is reported as delinquent, which immediately lowers your score. Second, when the debt transfers to a collection agency, that agency reports a new collection account, which is treated as a separate negative mark. Your score drop depends on your starting score — someone with excellent credit loses more points than someone already struggling — but a collection account typically reduces scores by 50 to 100 points or more.

This damage affects your ability to borrow. Credit card companies, auto lenders, and mortgage lenders all check your credit report. With a collection account visible, you may be denied credit entirely, offered credit only at much higher interest rates, or required to pay a larger down payment. Landlords and some employers also check credit reports, so an unpaid medical debt can affect housing and job prospects.

The account remains on your report for seven years from the date you first missed the payment. Paying the debt later does not erase it — it only changes the status from "unpaid" to "paid." The account still shows up and still affects your score, though a paid collection account is viewed more favorably than an unpaid one.

Hospital financial hardship programs before debt goes to collections

Most hospitals have financial hardship programs or charity care policies that reduce or eliminate bills for people who cannot pay. These programs exist specifically to prevent debt from reaching collection. To access them, you typically contact the hospital's billing department or financial counselor and provide proof of income — tax returns, pay stubs, or a letter stating your household income. Some hospitals use federal poverty guidelines; others use their own thresholds.

If you may have access to, the hospital may reduce your bill by a percentage, write off the entire balance, or convert it to a payment plan with no interest. The key is to contact the hospital before the bill goes to collections. Once a collection agency owns the debt, the hospital no longer controls it and cannot remove it from your credit report or stop the agency from pursuing you.

You can also negotiate a payment plan directly with the hospital's billing department. Even without a formal hardship program, many hospitals will accept smaller monthly payments rather than pursue collection. Document any agreement in writing — get the hospital's name, the agreed amount, the payment date, and the person's name and title.

What happens if a collection agency sues you

If a collection agency files a lawsuit, you will receive a summons and complaint, usually delivered by a process server or certified mail. The summons tells you when and where to appear in court. You have a right to respond — ignoring the lawsuit is the worst option because the agency will win by default and the judgment becomes final.

When you respond, you can challenge the debt on several grounds: you may dispute that you owe it, dispute the amount, or argue that the statute of limitations has passed (the time window during which the agency can sue). The statute of limitations for medical debt varies by state, typically ranging from three to six years from the date you stopped paying. If the agency sues after that window closes, you can ask the court to dismiss the case.

If you lose the lawsuit, the agency receives a judgment. At that point, they can begin garnishing wages or placing liens. Some states allow you to claim certain income as exempt from garnishment — Social Security, disability benefits, and unemployment benefits are typically protected, though the rules vary. Consult your state's court website or a legal aid organization to understand what income is protected in your state.

Paying a collection account and what it does and does not do

If you pay a collection agency, the account status changes from "unpaid collection" to "paid collection" on your credit report. This stops the agency from contacting you and prevents further lawsuits. However, paying does not remove the account from your report — it remains visible for seven years. A paid collection account still lowers your credit score, though less severely than an unpaid one.

Before you pay, get a written agreement from the collection agency. The agreement should state the amount you will pay, the payment date, and that payment will resolve the debt. Some agencies will agree to remove the account from your credit report in exchange for payment — this is called a "pay-to-delete" agreement — but they are not required to do so, and many refuse. If an agency offers to delete the account, get that promise in writing before you send money.

If you cannot afford to pay the full amount, you can try to negotiate a settlement. Collection agencies often accept less than the full balance because they bought the debt at a discount and any payment is profit. Offer a lump sum that is less than what you owe — for example, 30 to 50 percent of the balance — and ask if the agency will accept it as full settlement. Again, get any agreement in writing.

State laws that limit how much hospitals can collect

Some states have laws that restrict hospital collection practices or require hospitals to offer payment plans before pursuing debt. For example, California requires hospitals to offer interest-free payment plans and limits how aggressively they can pursue collection. New York requires hospitals to inform patients of financial hardship programs. These laws vary significantly by state, so check your state's attorney general website or a legal aid organization to learn what protections apply where you live.

Even in states without specific hospital collection laws, you have rights under the FDCPA and the Fair Credit Reporting Act (FCRA). The FCRA allows you to dispute inaccurate information on your credit report — if the collection agency is reporting an incorrect amount or a debt you already paid, you can file a dispute with the credit bureau and the agency must investigate.

Frequently Asked Questions

Can a hospital bill go to collections if I'm on a payment plan?

No, as long as you make the agreed payments on time. If you miss payments on the plan, the hospital may cancel it and send the remaining balance to collections. If your circumstances change and you cannot keep up with the payments, contact the hospital immediately to renegotiate rather than simply stopping payment.

Will my wages be garnished if I ignore a collection lawsuit?

Yes. If you do not respond to the lawsuit, the collection agency wins by default and can then garnish your wages. Responding to the lawsuit — even if you ultimately lose — gives you a chance to challenge the debt or negotiate. Some states also allow you to claim income as exempt from garnishment after judgment, but you must assert that right in court.

Does paying off a collection account improve my credit score immediately?

Paying stops the agency from contacting you and prevents further damage, but the account remains on your report and continues to affect your score. Your score may improve slightly once the status changes to "paid," but the improvement is usually modest. The account's impact decreases over time as it ages, and it disappears entirely after seven years.

What if the collection agency cannot prove I owe the debt?

If you dispute the debt in writing, the agency must investigate and provide proof that you owe it — typically a copy of the original hospital bill and your signature on a consent form. If they cannot provide proof, they must remove the account from your credit report. Send your dispute by certified mail so you have proof of delivery.

Can I negotiate with the hospital after debt goes to collections?

Once a collection agency owns the debt, the hospital no longer controls it. You must negotiate with the agency, not the hospital. However, if you pay the agency, some hospitals will work with you on future bills or financial hardship programs, so the relationship is not entirely severed.