Expert: Regan Shinski - 6/4/2010

Question
We had a medical bill go to collections for about $600. When the collection agency called, I told them I had just sent a payment so didn't think the amount they were telling me was valid.

I checked into it and found that the hospital had credited my current account with the payment and sent the old accounts in.

Within a couple weeks of my initial conversation with this Collection agency, we received a summons (only 30 days after the bill going to collections)

I sent the payment in full because we owed the money. Now, however, they are refusing to cash the check until I send them interest and attorney fees.

I do not understand why I have to pay interest and attorney fees when I paid the debt in full without going to court--all within 45 days of the agency getting this account. Are we really obligated to pay these fees?

Thanks, Amy

Answer
Hi Amy:

This really depends on state laws but most states do allow for court costs and attorney fees. Technically, the collection agency likely had to pay court fees just to file the case and serve you.  This is partially what they are trying to recoup.  

You can try making the payment directly to the medical provider but they may not take it either.  If they accept it, get a receipt and the cancelled check and be sure to show up and show it to the judge. Otherwise you will get a default judgement against you.

You want to avoid any judgement against you.  It's awful on the credit and difficult to remove.  You may want to consider (if you are able) offering to pay in full in exchange for removal of the collection from your reports.  Just get any agreement in writing before giving the money.

Other options include filing a countersuit based on the FDCPA, but time may be short.  Send a certified letter to the collection agency asking for debt validation under the FDCPA.  Get copies of your credit reports and look for errors in the listing.  One is available for free at www.annualcreditreport.com.  These are the first steps in a FDCPA countersuit.  If there is an error, the statute calls for up to $1,000 plus actual damages as the penalty.  So if there are any errors, your countersuit may offset any judgement and get them to accept the $600 as payment in full.

Less direct methods include filing complaints with the Better Business Bureau, attorney general, or any other licensing or profession agency they belong to including the ABA - American Bar Association.  You can also file a complaint with the medical provider.  However, if the medical provider is sympathetic, they may even threaten to stop sending future work to this collection agency if they don't drop the case.

You have a lot of options but you may just be short on time.  You can also ask the court for a delay or continuance.  Contact the court directly to find out the procedures to do so in your jurisdiction.

Sorry for the scattered response but, like I said, you have a lot of solid options just none that are a slam dunk for you.

Good luck.
Regan