At OakTree Law, we provide various solutions to help improve your financial situation. These include Chapter 7, Chapter 11, and Chapter 13 bankruptcy as well as help with avoiding foreclosure or wage garnishment. Medical debt is one of the leading reasons people seek financial relief. We’ve helped many clients get back on their feet, but in California, a statute of limitations on medical debt can impact how you proceed.
How Long Can a Debt Collector Pursue Payments?
For nearly all medical bills, collectors can pursue your debt for up to 4 years from the date the bill was issued. “Open book” exceptions extend the statute to the last service rendered or the date of last payment. Generally, the statute of limitations applies when there’s a breach of written contract; in other words, you failed to pay a bill from a hospital, clinic, or doctor’s office.
If your debt falls within the statute of limitations, the issuer can attempt to collect the debt. If unsuccessful, they can file a lawsuit against you, or the money owed can be assigned to collections or sold to a collection agency. However, they can’t file a claim if the statute of limitations has expired.
Laws Concerning the California Statute of Limitations on Medical Debt
State law traditionally required hospitals to provide 150 days to negotiate a payment plan. However, a new law increased the time hospitals must wait before reporting debts or filing collection actions to 180 days. Not until this period has passed can they send your medical bills to a debt collector.
The Fair Debt Collection Practices Act (FDCPA) also applies and makes it illegal for collectors to make annoying or distressful calls, threats, or claims that they’re lawyers or representatives of a credit reporting company or government agency. Obscene or abusive language is also forbidden.
On January 1, 2022, a new medical debt law took effect in California. It establishes various new provisions that:
- Limit the collection actions licensed agencies can take.
- Require health care clients to establish written policies on how accounts are sent to third-party collectors.
- Require hospitals to display a notice of and link to their policy online.
Also, medical debt can’t be assigned to collections unless the hospital:
- Sends the patient a notice that provides a timeframe for doing so.
- Lists the entity a bill will be assigned or sold to.
- States how the patient can receive an itemized bill from the hospital.
- Identifies the name/type of the patient’s health coverage
- Lists the date a facility or its agent originally sent the patient a notice about financial assistance
- Reveals any decision regarding a financial assistance application.
Amendments to an existing law prohibit the collection of hospital debts without providing the consumer with the first written communication notifying them their debt may go to collections. Actions to collect hospital debt will be under greater scrutiny. Under the California Civil Code, any complaint now filed to collect hospital debt is valid only if it includes certain factual allegations.
Contact OakTree Law
Unfortunately, many debt collectors ignore the law and engage in harassing tactics. But our Los Angeles bankruptcy attorneys are familiar with the California statute of limitations on medical debt and the newest laws protecting consumers. To learn more, request a free evaluation online or call 888-348-2609 to speak with us directly.
FAQs
How Long Can a Debt Collector Pursue Payments? For nearly all medical bills, collectors can pursue your debt for up to 4 years from the date the bill was issued.
How long can medical debt be collected in California? ›
CCP § 337 for almost all contracts: 4 years from the date of the bill. Notice the “open book” exception that extends the SOL to the last service rendered and §360 which extends it to the date of last payment. If the bill is from a state or county hospital, the law is the same, but cite CCP § 345.
How long before a debt becomes uncollectible in California? ›
California's statute of limitations on debt is 4 years, per the state's Code of Civil Procedure § 337. A statute of limitations is the amount of time you have to take legal action. In the case of debt, it refers to how long a creditor has before it can ask a court to force you to pay debt.
What is the Statue of Limitation on Debt Collection in California? ›
Debt collectors may not be able to sue you to collect on old (time-barred) debts, but they may still try to collect on those debts. In California, there is generally a four-year limit for filing a lawsuit to collect a debt based on a written agreement.
How long does a collection agency have to sue you in California? ›
This means that a creditor only has four years to sue you for credit card debt, medical debt, student loan debt, and auto loan debt in California. Likewise, creditors only have six years to sue someone for a mortgage debt or personal loan debt in California.
What happens to unpaid medical bills in California? ›
You will not go to jail for having an unpaid medical debt or having a judgment against you. You may be able to negotiate and settle your medical debt, often for less than you owe. Another company may have bought your debt from the creditor and this debt buyer may be who is suing you.
How long before a debt becomes uncollectible? ›
Is there a statute of limitations on medical bills in California? ›
For nearly all medical bills, collectors can pursue your debt for up to 4 years from the date the bill was issued. “Open book” exceptions extend the statute to the last service rendered or the date of last payment.
Can a 10 year old debt still be collected? ›
Can a Debt Collector Collect After 10 Years? In most cases, the statute of limitations for a debt will have passed after 10 years. This means a debt collector may still attempt to pursue it (and you technically do still owe it), but they can't typically take legal action against you.
Can a debt collector restart the clock on my old debt? ›
Keep in mind that making a partial payment or acknowledging you owe an old debt, even after the statute of limitations expired, may restart the time period. It may also be affected by terms in the contract with the creditor or if you moved to a state where the laws differ.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
What is the Rosenthal Act in California? ›
The California statute is called the Rosenthal Fair Debt Collection Practices Act. Creditors and debt collection agencies are permitted to take reasonable steps to enforce and collect payment of debts. That is because an efficient and productive economy requires a credit process.
What happens if you never pay collections? ›
If you don't pay, the collection agency can sue you to try to collect the debt. If successful, the court may grant them the authority to garnish your wages or bank account or place a lien on your property. You can defend yourself in a debt collection lawsuit or file bankruptcy to stop collection actions.
Can you dispute a debt if it was sold to a collection agency? ›
They gave you the money, and you should pay. The same is true even if the debt is sold and belongs to someone else. However, you have every right to dispute the debt if details are lost during the transition from the original creditor to the debt collection agency.
What happens if a credit card company sues you and you can t pay? ›
You may lose the ability to dispute the debt, if you believe you don't owe it or that the amount is wrong, and depending on your situation and your state's laws, the creditor may be able to: Garnish your wages. Place a lien against your property. Move to freeze funds in your bank account.
How do I know if my debt is statute barred? ›
If you're not sure if your debt is statute barred, or you think your debt will soon be statute barred, contact your nearest Citizens Advice. If you haven't reached the time limit yet, making a payment to your creditor will always reset the time limit.
Can you inherit medical debt California? ›
While creditors are given the first opportunity to stake their claims to a decedent's assets, they cannot hold heirs financially responsible for the deceased person's debts. Creditor claims are settled with a decedent's estate—not the decedent's heirs.
How do I protect my house from medical debt in California? ›
What is a Medi-Cal Asset Protection Trust? A Medi-Cal Asset Protection Trust is an irrevocable trust specifically created to hold and manage your primary residence and other assets so that you can qualify for Medi-Cal and to prevent the State of California from taking your home and assets from your heirs.
