Questions: Medical Debt and Validation vs. Dispute

chryanna · ‎08-12-2016

This forum was invaluable to me a few years ago when I was cleaning up my credit. I'm pretty savvy now, have excellent credit in all three bureaus and just bought an amazing house in May- qualifying for the lowest interest rates possible!

Some dear friends of mine got into real trouble a few years back with medical debt and have asked for help in resolving their credit. And while I feel like I know some, I'm so much more nervous now that it's not just my credit in my hands. So I have a few questions. I do know how to use HIPAA laws to get medical debt off credit reports. Frankly, though, they don't have the money to pay even a quarter of their various medical collections. So before I call to negotiate a paid-in-full with the hospitals, I was considering disputing the debt with the CAs to see if any drop off without any money paid.

Will this ruin getting them off via HIPAA notice procedures? I figure even I dispute and the COAs successfully produce records to the bureaus, I can dispute a second time, saying the debt's been paid/isn't owned by them and these aren't reflective/not-updated. And then show that documentation and they'll drop off? Or no?

Also, they do have two other collections because things have just become financially untenable (100k+ medical debt No previous credit problems for couple in their forties- feel so bad for them.) I know people generally advise validating the debt then disputing. But it seems like that might just give the CAs more time to find their files- two different thirty day windows. Is that not how it works? There's no way of really proving that they didn't respond to a validation request, right? Even if you use registered mail. Or is that not how it works in practice?

Their last thing is car payments. They have a terrible payment record on their car. As in several instances of 30, 60 and 90 day lates over the past two years (though current as of this month). Which option is likely to be better here: asking for good faith waivers of the several instances of poor history or just selling the car, paying off the debt in its entirety and then disputing, hoping the company won't bother responding?

Also, bankruptcy is definitely an option based on their finances. But they won't consider it.

Anonymous · ‎08-12-2016

@chryanna wrote:
This forum was invaluable to me a few years ago when I was cleaning up my credit. I'm pretty savvy now, have excellent credit in all three bureaus and just bought an amazing house in May- qualifying for the lowest interest rates possible!

Some dear friends of mine got into real trouble a few years back with medical debt and have asked for help in resolving their credit. And while I feel like I know some, I'm so much more nervous now that it's not just my credit in my hands. So I have a few questions. I do know how to use HIPAA laws to get medical debt off credit reports. Frankly, though, they don't have the money to pay even a quarter of their various medical collections. So before I call to negotiate a paid-in-full with the hospitals, I was considering disputing the debt with the CAs to see if any drop off without any money paid.

Will this ruin getting them off via HIPAA notice procedures? I figure even I dispute and the COAs successfully produce records to the bureaus, I can dispute a second time, saying the debt's been paid/isn't owned by them and these aren't reflective/not-updated. And then show that documentation and they'll drop off? Or no?

Also, they do have two other collections because things have just become financially untenable (100k+ medical debt No previous credit problems for couple in their forties- feel so bad for them.) I know people generally advise validating the debt then disputing. But it seems like that might just give the CAs more time to find their files- two different thirty day windows. Is that not how it works? There's no way of really proving that they didn't respond to a validation request, right? Even if you use registered mail. Or is that not how it works in practice?

Their last thing is car payments. They have a terrible payment record on their car. As in several instances of 30, 60 and 90 day lates over the past two years (though current as of this month). Which option is likely to be better here: asking for good faith waivers of the several instances of poor history or just selling the car, paying off the debt in its entirety and then disputing, hoping the company won't bother responding?

Also, bankruptcy is definitely an option based on their finances. But they won't consider it.

Why would they not consider BK with $100K of medical debt?

chryanna · ‎08-12-2016

Pride. I've tried to talk to them- I even have a bankruptcy attorney I personally know who could help at a reduced rate. But they're very ashamed of all of this, and she, in particular, refuses "the additional embarrassment and failure" of bankruptcy. He believes they'll lose their home, despite assurances that that won't happen. They own it outright, but it's a mobile home, so even a home equity line is unlikely, and wants to pay all the debts he's due.

He wouldn't even let me try to renegotiate a lower amount owed until I showed him that their lack of insurance resulted in their being charged significantly more for things that people with insurance ever would have been charged. So now I have the go-ahead to try to reduce the balances owed. But they still want to pay them.

RobertEG · ‎08-12-2016

The primary issue in disputing under the FCRA vs requesting debt validation under the FDCPA is whether the consumer can assert an actual error in their credit reporting.

In general, requests for debt validation under the FDCPA do not require the showing of any actual or specific inaccuracy.

However, a dispute under the FCRA requires identification of a specific inacurracy in what has been reported, with sufficient documenttion to permit the debt collector to conduct a reasonable investigtion.

If the debt is valid, then it may be difficult to show a specific inaccuracy.

There is also a timeliness issue.

Requests for debt validation must be sent within 30 days after receipt of the initial collection ("dunning") notice to be timely.

Untimely DV requests impose no cease collection bar, and the debt collector can simply continue their collection activities without any response.

Even if timely, a DV imposes no period for or requirement to respond, and thus validation can be delayed indefinately provided the debt collection does not continue active collection on the debt.

chryanna · ‎08-12-2016

There are errors in at least every collection. Some are minor- wrong spelling of first name or street address. Others have the incorrect balance or DOFD. But I'd be able to challenge each of them. I don't think it's wrong to hope that challenging them would result in their being dropped instead of corrected due to the CA's disorganization or lack of timely response. I remember when I went through this, it seemed like there were timely responses less than 50% of the time.

I do appreciate your comments. I think a dispute is the way to go. But is there any fear this would compromise other resolutions? Since their negative marks are almost exclusively medical debt-related, I'm really putting more hope into renegotiating with the original creditors and getting the CAs removed through HIPAA privacy notices/dispute. I want to make sure I'll be able to dispute twice though- it would be a different reason- the second inaccuracy since the debt has been paid. I don't think there should be a problem, but I'd like to double check.

RobertEG · ‎08-12-2016

A second or subsequent dispute can be dismissed as "frivolous or irrelevant" if it is "substantially the same" as a prior dispute.

When the direct dispute process was implemented, the regulations at 16 CFR 660.4 clarified that a subsequent dispute is not "substantially the same" if it involves the accuracy of different information, or if it includes additional information not previously submitted in support of the dispute.

RobertEG · ‎08-12-2016

A second or subsequent dispute can be dismissed as "frivolous or irrelevant" if it is "substantially the same" as a prior dispute.

When the direct dispute process was implemented, the regulations at 16 CFR 660.4 clarified that a subsequent dispute is not "substantially the same" if it involves the accuracy of different information, or if it includes additional information not previously submitted in support of the dispute.

Anonymous · ‎08-12-2016

@chryanna wrote:
There are errors in at least every collection. Some are minor- wrong spelling of first name or street address. Others have the incorrect balance or DOFD. But I'd be able to challenge each of them. I don't think it's wrong to hope that challenging them would result in their being dropped instead of corrected due to the CA's disorganization or lack of timely response. I remember when I went through this, it seemed like there were timely responses less than 50% of the time.

I do appreciate your comments. I think a dispute is the way to go. But is there any fear this would compromise other resolutions? Since their negative marks are almost exclusively medical debt-related, I'm really putting more hope into renegotiating with the original creditors and getting the CAs removed through HIPAA privacy notices/dispute. I want to make sure I'll be able to dispute twice though- it would be a different reason- the second inaccuracy since the debt has been paid. I don't think there should be a problem, but I'd like to double check.

Are these debts still within the SOL? If so, I would worry about a judgement as well, which would give them a double hit on their CR. Just getting them off the CR doesn't make the debt go away, and it can come back at anytime with a correction of the wrong data (name, etc.) I completely understand their thoughts on BK--I have always seen it the same way, but sometimes you just have to admit defeat. They must have found themselves in quite a bad place to have $100,000 in medical bills--it's not like they racked up $100k in credit cards. I hope you can help them.

chryanna · ‎08-12-2016

They're in the worst possible state- West Virginia. 10 Year SOL. Another reason settlement of the medical debt is probably their best option. (We have talked through the risks of that happening, and they just don't want things hanging over their heads any longer.) But yeah, I'd hate to do them any additional harm, and want to be as helpful as possible. The good news is they did come out of the other side, healthwise. Now to just work on putting all of this behind them. If at any point they'll reconsider bankruptcy, I'll do everything I can to help with that. But in the meantime, even if I don't agree, I still want to try to help.