Newborn's medical expenses in collection

In all the stress and excitement my daughter forgot to inform their insurance carrier to add their newborn within 30 days. She is now almost 6 months old. The debt is now in collection. They've filed an appeal with their carrier but they are very slow in responding. They are trying to work with the collection agency and insurance carrier. The collection agency wants over $500 a month as a payment but they cannot afford that. To further negotiate anything with them, they are demanding ALL of their financial information! Is this right? Is this going to ruin their credit? Do they have any recourse? I am researching for them as they do not have a computer.

Comments for Newborn's medical expenses in collection

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Apr 20, 2012
Newborn's medical expenses in collection

Congratulations on your new grandchild. Sorry that your daughter and her husband are having a collection problem at this time in their lives.

The collector's demands are part of a strategy to get them to pay as much as possible on their debt because the more they pay, the more he makes. Although your daughter and son in law should not agree to pay more than they can afford, the collector is not legally obligated to accept their offer and if they can’t reach an agreement with one another he may sue them for the money.

Your daughter and son in law may want to try settling the debt, which involves paying it off for less than the full amount. They would have to negotiate a settlement with the collector and if they are successful, they will probably have to pay the agreed upon amount in a lump sum. They should not pay it until they have a written agreement in hand. The same is true if they work out a payment plan.

They should go here for information about how to negotiate a settlement , and if they want negotiating help from a reputable organization, they should check out Consumer Recovery Network.

Your daughter and her husband have one more option--filing for bankruptcy. Depending on the kind of bankruptcy they file, they can either wipe out the medical debt or pay it (probably a reduced amount) over time. Also all collection actions against them will stop during their bankruptcy. To explore this option, they should schedule a FREE initial evaluation with a bankruptcy attorney. I also recommend that they read the information here how to file for bankruptcy.

As to whether the collector has the right to demand all of their financial information, although your daughter and son in law are not obligated to provide this information, the collector won't agree to a plan without having it because he will want to be sure that what they say they can pay is true. However, if they provide the information and later the collector sues them over the debt and wins, the information would make it easier for him to collect on the court judgment. If they do share their information with the collector, they should not give him their bank account numbers. If they do, they risk the collector using that information to take money from their accounts.

The fact that they have a debt in collections will probably appear in their credit histories and damage them. The same is true if they are sued or if they file bankruptcy. However, the negative information won't stay there forever. Federal law says it can be reported for only 7 years in most instances.

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