How to Negotiate a Doctor's Lien

Health insurance in the United States is often quite costly. According to CNN, 60 percent of bankruptcies in the U.S. are due to outstanding medical bills. Before bankruptcy, these bills will often show up as a judgment or a lien on your credit report. If you do not want to file bankruptcy, you can attempt to negotiate this debt with either the physician's collector or the collection agency.

Instructions

1

Find out who holds the medical lien. Sometimes doctors will use their own attorneys to collect on unpaid medical bills. Other times physicians or hospitals will sell the unpaid debt to a collection agency. You need to know with whom you'll be negotiating.

2

Look at the most recent bill. The name of the collector may be on the bill. If not, pull a copy of your credit report at Annual Credit Report, listed in Resource 1. This is a free credit report. Look at the Public Record/Judgment section of your report. The medical lien, with the creditor name, will be listed.

3

Calculate your debt-to-income ratio (DIR). You must prove to the creditor or collection agency that you are unable to pay the medical debt as it stands. To figure your DIR, divide the total of all monthly bills by your monthly gross income. Most collectors will not negotiate unless you can prove an economic hardship--as demonstrated by a DIR above 50 percent.

4

Review your medical bills and history. In addition to income constraints, you will likely need to demonstrate a reason for the unpaid bills. In many cases, this is the cost of medical treatments. Pull together all recent bills and hospital statements showing expenses.

5

Contact the collection agency. Ask for a specific repayment agreement. This will include a monthly payment amount (that you can afford based on your DIR). Ask for all fees to be waived (annual fees, late fees). Only ask for a debt settlement if you can absolutely not pay the entire amount. (Debt settlement will damage your credit for seven additional years.)

6

Counter the collection agency's offer. Try to get some fees waived and increase the suggested monthly payment amount. You must come to a compromise with the collector. Be reasonable. Asking for drastic terms may encourage the lender to cease negotiations.

7

Obtain any new repayment agreements in writing. Review the document fully before you sign it. You might also want to consult with an unbiased third-party, such as your accountant.