Is It Illegal to Send Medical Bills to Collections? What You Need to Know in 2025

Receiving a notice that your unpaid medical bill has been sent to collections can be alarming, especially when you didn’t even know you owed money. Many people wonder: Is it even legal to send medical bills to collections? The short answer is yes, but there are laws and rules that protect you as a patient and consumer. Here’s what you need to know in 2025.

Yes, It’s Legal, But with Conditions

It is not illegal for healthcare providers or hospitals to send unpaid medical bills to collections. This is a standard process used to recover debt. However, it must be done in accordance with federal and state laws, including the Fair Debt Collection Practices Act (FDCPA) and updated credit reporting regulations.

Here’s How the Process Works:

1. Initial Billing Period:
   After you receive medical services, you’re issued a bill. If insurance applies, you’ll receive an Explanation of Benefits (EOB) first. You are typically given 90 to 180 days to pay the bill. 
2. Multiple Notices:
   Providers usually send reminder letters, phone calls, or emails if the bill is unpaid. They may offer payment plans or discuss financial hardship options. 
3. Debt Sent to Collections:
   If no payment or response is received, the provider may sell or assign the debt to a collection agency. This is where many patients are caught off guard. 

What Makes the Process Legal?

For a medical bill to be legally sent to collections:

• You must have received notice of the debt. 
• The debt must be valid and accurately billed. 
• The collector must comply with the FDCPA, which prohibits harassment, threats, or misleading information. 
• You must be given the right to dispute the debt within 30 days. 

If any of these steps are skipped or mishandled, you have the right to challenge it.

Key Patient Protections in 2025

Thanks to changes in U.S. credit reporting and healthcare billing rules, patients now have more protection:

• One-Year Waiting Period:
  Medical bills can’t be reported to credit bureaus until at least 1 year after they go to collections, giving you time to resolve insurance claims or billing errors. 
• $500 Threshold:
  As of 2023–2025, medical debts under $500 are no longer reported on credit reports. 
• Paid Collections Must Be Removed:
  Once you pay or settle the debt, the collection must be removed entirely from your credit report, not just marked “paid.” 

When It Might Be Illegal

While sending bills to collections is legal, there are cases where it could become illegal or unethical, such as:

• Billing errors: Being sent to collections for a bill you never owed or already paid. 
• No notification: If you were never properly informed of the debt. 
• Insurance delays: When providers send a bill to collections before resolving an ongoing insurance claim. 
• HIPAA violations: Sharing protected health information (PHI) improperly with third-party collectors. 

If you believe any of these occurred, you can file complaints with the Consumer Financial Protection Bureau (CFPB) or your state attorney general’s office.

What to Do If Your Medical Bill Goes to Collections

If you’ve received a collections notice:

1. Request debt validation in writing within 30 days. 
2. Check your insurance records to confirm coverage or disputes. 
3. Negotiate or request a payment plan if the debt is valid. 
4. Ask about financial hardship programs directly from the original provider. 
5. Monitor your credit report to ensure incorrect medical debt isn’t listed. 

Bottom Line: Legal but Regulated

So, is it illegal to send medical bills to collections? No, but the process is strictly regulated to protect your rights. In 2025, new laws have made it harder for medical debt to damage your credit, but the responsibility still falls on you to review bills, communicate with providers, and take action when needed. Knowing your rights can prevent stress, surprise collections, and long-term financial damage.