Can Medical Debt Collectors Sue You? What Happens If They Win

Medical debt collectors can sue you. They do it every day. In 2022 alone, roughly 530,000 Americans faced lawsuits over medical bills, according to Kaiser Family Foundation data. The question isn't whether they can sue—it's whether they have the legal grounds to win.

If a collector contacts you about a hospital bill from three years ago, they might have a case. If it's from nine years ago, they might not. Your rights depend on when the debt originated, where you live, and whether the collector can prove you actually owe the money.

Why Medical Debt Collectors Sue

Hospitals and medical providers rarely sue patients directly. Instead, they sell unpaid accounts,often for pennies on the dollar,to debt buyers. These companies purchase portfolios of thousands of debts at once, sometimes paying as little as 4 cents per dollar of debt.

Once they own your debt, collectors have three ways to recoup their investment:

• Call and send letters hoping you'll pay voluntarily
• Report the debt to credit bureaus to pressure you
• Sue you in civil court to get a judgment

Lawsuits are expensive, so collectors typically reserve them for debts over $1,000. But that threshold varies. Some firms sue over $500 balances if they think you have wages to garnish or assets to seize.

What They Must Prove in Court

To win a medical debt lawsuit, collectors need to establish three facts:

The Debt Is Yours

They must show you received the medical services. This sounds obvious, but debt buyers often purchase accounts with minimal documentation. If they can't produce your signed treatment forms or itemized bills, their case weakens.

You Owe the Amount Claimed

Collectors must prove the exact dollar amount. Many lawsuits inflate totals with interest, fees, or charges that weren't part of the original bill. You have the right to demand an accounting that shows how they calculated the sum.

The Debt Is Still Legally Collectible

Every state sets a deadline,called the statute of limitations,for filing debt collection lawsuits. Once that window closes, the debt becomes "time-barred." Collectors can still ask you to pay, but they cannot sue.

Statute of Limitations on Medical Debt by State

The clock on medical debt lawsuits starts ticking from the date of your last payment or the date of service (rules vary by state). These deadlines range from 3 to 10 years depending on where you live:

• 3 years: California, Louisiana, Mississippi
• 4 years: Alaska, Arizona, Idaho, New Hampshire, Utah
• 5 years: Colorado, Georgia, North Carolina, South Carolina, Tennessee
• 6 years: Florida, Kansas, Michigan, New York, Texas, Washington
• 7+ years: Ohio (15 years on written contracts), Rhode Island (10 years)

Once this period expires, you gain an absolute defense against lawsuits. But there's a critical trap: making even a $5 payment on old debt can restart the clock in many states. A collector who calls about a 5-year-old bill might trick you into "reactivating" a debt that was about to expire.

Before you pay anything on old medical debt, verify the statute of limitations in your state. If you're past the deadline, any payment is voluntary,you cannot be sued.

What Happens If a Collector Wins

If a medical debt collector sues you and wins,or if you ignore the lawsuit and lose by default,the court issues a judgment. That judgment converts your unpaid bill into a legal order, giving the collector powerful tools:

Wage Garnishment

In most states, collectors can seize up to 25% of your disposable earnings (the amount left after taxes and mandatory deductions). Federal law caps garnishment at 25% or the amount by which your weekly income exceeds 30 times the federal minimum wage, whichever is less. Four states,Pennsylvania, North Carolina, South Carolina, and Texas,prohibit wage garnishment for consumer debts entirely.

Bank Account Levies

With a judgment, collectors can freeze your checking or savings account and withdraw the amount you owe. Some exemptions apply for Social Security income, veterans benefits, and certain public assistance funds, but you must claim these protections. Banks won't do it for you.

Property Liens

Collectors can place liens on real estate you own. This doesn't force an immediate sale, but you cannot sell or refinance the property until you pay the judgment. In some states, liens can remain for 10 to 20 years and accrue interest.

Judgments also destroy your credit. They stay on your credit report for up to seven years from the filing date, dropping your score by 60 to 150 points depending on your starting profile.

How to Respond to a Medical Debt Lawsuit

When you receive a summons, you typically have 20 to 30 days to file an Answer with the court. Miss this deadline and the collector wins by default,no trial, no negotiation. Default judgments account for roughly 70% of debt collection cases because defendants don't respond.

File an Answer Immediately

An Answer is a formal written response to the lawsuit. You don't need a lawyer to file one, though legal help improves your odds. In your Answer, you respond to each claim the collector makes. You can:

• Deny their allegations ("I deny that I owe $4,200")
• State you lack knowledge to admit or deny ("I lack sufficient information to admit or deny the plaintiff purchased this debt")
• Assert defenses ("This debt is time-barred under state law")

Filing an Answer forces the collector to prove their case. Many debt buyers lack the documentation to do so. Once you respond, settlement offers often arrive quickly.

Demand Proof of the Debt

Send a debt validation letter within 30 days of the collector's first contact, ideally before they sue. Under the Fair Debt Collection Practices Act, collectors must provide:

• The name of the original creditor
• The amount you allegedly owe
• Documentation showing they own the debt

Debt buyers often purchase accounts with minimal paperwork. If they can't verify the debt, they must stop collection efforts. Keep copies of everything you send and receive.

Negotiate a Settlement

Collectors buy medical debt cheap, so they'll often settle for 30% to 50% of the balance. Once you file an Answer, they know you're willing to fight. That makes settlement more attractive than a trial.

Get any settlement in writing before you pay. The agreement should state the collector will dismiss the lawsuit and report the account as "paid" or "settled" to credit bureaus. Never agree to a payment plan without this written guarantee.

Options If You Can't Pay

If the debt is valid, within the statute of limitations, and you genuinely cannot pay, you have options beyond letting a collector garnish your wages.

Negotiate a Payment Plan

Many collectors will accept monthly payments, especially if you're judgment-proof (you have no wages or assets they can seize). Offer what you can afford. They might take $50 a month rather than nothing.

Request a Hardship Dismissal

Some states allow hardship defenses if you're living on exempt income like Social Security or disability. Courts may dismiss the case or reduce the judgment if you can prove payment would cause severe financial distress.

Consider Bankruptcy

Medical debt is unsecured and dischargeable in bankruptcy. If you're facing multiple lawsuits or judgments, filing for bankruptcy might be the fastest way to stop garnishments and wipe out the debt entirely. Chapter 7 can eliminate medical bills in as little as three to four months.

Bankruptcy won't fix everything, but it stops collection lawsuits immediately through an automatic stay. If you owe $10,000 or more across multiple creditors, bankruptcy might cost less than fighting lawsuits individually. Use our bankruptcy screener to see if you qualify.

Medical Debt Protections You Should Know

Recent changes have strengthened consumer protections around medical debt:

• Credit reporting changes: As of July 2022, the three major credit bureaus no longer report medical debts under $500. Paid medical collections are also removed from credit reports immediately.
• Extended grace periods: Medical debt doesn't appear on your credit report until it's been unpaid for one year, giving you more time to resolve disputes or negotiate.
• No Surprises Act: Protects you from surprise billing in emergency situations and limits what out-of-network providers can charge.

Despite these protections, collectors can still sue you for unpaid bills. The changes only affect credit reporting, not your legal liability.

What to Do Right Now

If a medical debt collector has contacted you or filed a lawsuit, take these steps today:

1. Check the date of the debt. Look at your records or ask the collector for the date of service. Compare it to your state's statute of limitations.
2. Send a debt validation letter if you haven't already. Do this within 30 days of first contact. Use certified mail with return receipt.
3. File an Answer if you've been sued. Don't miss your deadline. Your court date is on the summons.
4. Pull your credit report at AnnualCreditReport.com. See what else is out there.
5. Document every interaction with the collector. Save voicemails, letters, emails, and text messages. Collectors who violate the FDCPA can be sued.

One lawsuit can spiral into wage garnishment and bank levies within months. But you have defenses,and collectors know it. The moment you respond, you shift the power dynamic. Most debt buyers would rather settle than prove their case in court.