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How long can they hold debt without notifying?


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We recently received notice from a collections agency that we owed them about $3500. We followed up the source of the debt and it turns out to be legit, from a medical bill my husband thought had already been paid but wasn't, from before we were married (just fantastic). We are in Washington, but the debt (and the agency) are from Oregon.

 

The last charge on the account is from February 2009, and the bill was sent to the collections agency in November 2009. We were never contacted by the agency until last week (the statue of limitations in Oregon is 6 years, so they contact us at 5). That means that about $1000 of the $3500 is interest that accrued while the collections agency we'd never heard of sat on our debt.

 

Can they do that? We are not hard to find; not off the grid or anything like that. The principal we're going to have to pay, but do we have any leverage here on the interest?

 

e: as an additional note, I did check with the hospital that they require an agreement that interest can be charged if the bill goes to collections in their standard paperwork. So the interest existing is legit as well, I'm just wondering about letting it accrue for so long before contacting.

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My only experience has been with JDBs and they almost never have the contract in order to charge the contract rate. The default in some states allows statutory interest which is set by the legislature. Since you are already in contact with them I would get the contract and find out the rate and make sure it all adds up.  

 

http://www.dfi.wa.gov/consumers/interest_rates_guide.htm

 

The CA falls under the FDCPA, so I would definitely check to see if they have committed any violations. If you plan on paying the bill I would definitely try to gain any leverage in order to get the amount reduced. I'm guessing since they have ignored you for so long they are not very aggressive. Sometimes they just send out "fishing letters" hoping someone will "bite". My strategy is to ignore something this old while others always send a DV letter. Its always possible they might sue now that they know he is alive. 

 

@Clydesmom knows a lot about medical debt. I would get her input on your situation. 

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@ArtVandelay  thanks for the heads up.

 

Can they do that? We are not hard to find; not off the grid or anything like that. The principal we're going to have to pay, but do we have any leverage here on the interest?

 

Unfortunately, yes they can do that.  To date there is not language in the law that says they are required to do begin collections as soon as possible and sadly many will sit on a debt to rack up interest  before they try to collect to pad their pocket.  The reason is the CA the hospital contracted probably works on commission:  the more they collect the more they get paid so they allow interest to build up.

 

Add to that they will show the hospital sent 6 months worth of bills before sending it to collections and that your husband knew he had a debt.

 

 as an additional note, I did check with the hospital that they require an agreement that interest can be charged if the bill goes to collections in their standard paperwork. So the interest existing is legit as well, I'm just wondering about letting it accrue for so long before contacting.

 

That was going to be my next suggestion but you took care of it.  Some illegally add interest they are not allowed to but this is not the case.

 

Solutions:

 

1)  they are unlikely to sue because they would have to do it where you live not in Oregon and that gets expensive.  Though some have done so.  Typically they do not wait this long though.

 

2) I would contact the hospital directly and make arrangements to pay them.  Did your husband use insurance?  If he did he cannot do what I suggest next:  offer a one time settlement lump sum payment of a reduced amount.  If he used insurance and this is his portion they cannot discount it.  If he didn't use insurance then I would offer 40% one time to pay it off and include language in the settlement that they remove all negative trade lines.  Hospitals cannot issue a 1099-C so do not worry about that.  

 

3)  Your last option is to ignore them and wait for it to fall off in two years.  To me that is a LONG time to wait though.

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Does your medical bill from Oregon relate to the OHP?  If so, this link may be of interest to you:

 

http://oregonlawhelp.org/resource/medical-debt-on-ohp?ref=FOT0E

 

That page is VERY misleading.  First:  OHP is the Oregon Medicaid Program. Providers who take Medicaid do not bill patients directly ever.  They get dropped from Medicare and Medicaid if they do.  NO WHERE does that statute state that they cannot report, that a waiver is required to bill, and it in fact includes a table for how much patients have to pay towards their care.  Few patients have 100% Medicaid.  There are co-pays (though not at high as commercial coverage) and if they do not pay those the provider can report them.

 

Second:  The section of the OR statute that the page quotes does NOT say they cannot report the debt.  It outlines billing procedures, what is covered, and other procedures for using the benefits.  

 

Third:  if a waiver does allow them to bill the patient for care not covered I guarantee you that the majority of providers are getting that signed as part of the financial agreement.  

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