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If you think you're immune to damage from a collection account on your credit report because you pay your bills on time, think again. Medical bills you don't know about could be hurting your credit, and the odds are not reassuring. An estimated 30 million Americans were contacted by collection agencies for unpaid medical bills in 2010, according to the Commonwealth Fund. has written extensively about medical bills and the havoc they can create on your credit. You've responded by sharing your stories about sky-high bills, insurance processing delays and mistakes, and dealing with collection agencies who collect this type of debt on our blog.

Here we pull together our best advice for dealing with these problems.

Unfortunately, some patients are under the impression that medical bills don't affect their credit, or are treated differently when their credit scores are calculated. That's simply not true. A single collection account -- even for a $15 co-pay -- can cause your score to plummet. Just ask the Cobbs, a couple in Illinois whose plan to refinance their home was derailed when they discovered their credit scores were too low. The cause? A billing glitch resulted in them being sent to collections for several co-pays.

And don't think that just because you have insurance, you're immune. Even with excellent insurance, your bills may not be covered, as one man found out when he got an $83,000 bill from an "out of network" surgeon after he accidentally sliced off his finger with a table saw.

Make sure you review one of our most popular articles on this topic, where we debunk four medical billing myths that may wind up costing you big time:

  • Myth No. 1: As long as I am making payments on a medical bill, it can't be sent to collections.
  • Myth No. 2: I have to be notified before a medical bill is turned over for collections.
  • Myth No. 3: Medical collection accounts are treated differently than other types of collection accounts when credit scores are calculated.
  • Myth No. 4: I need to pay off these debts to clean up my credit.

There's no foolproof way to prevent one of these bills from turning into a collection account on your credit, and there is no sure-fire cure for fixing it when it does happen. But that doesn't mean you have to sit by helplessly while it destroys your credit scores.

You have rights

Anytime you are contacted by a collection agency, you have the right to written confirmation of the debt, as well as the right to dispute it. Those are your rights under the federal Fair Debt Collection Practices Act. Debt collectors aren't allowed to break the law when contacting you about a bill from a doctor or hospital. If you know your rights, you're in a better position to stand up for them.

Under the federal Fair Credit Reporting Act, you also have the right to dispute inaccurate information on your credit reports. But you have to know how to properly dispute an item on your credit report to get results.

Monitoring payment for routine office visits should be straightforward, especially when all you owe is an office visit co-pay. But as one of our readers who worked in medical billing for many years pointed out, it's often up to the patient to double-check that all the charges are billed and paid properly.

If you really want to understand why medical billing is such a mess, you'll want to read the interview with a physician who is speaking out about the problems he and his patients encounter. Be sure to check out his tips for saving money on prescriptions, even if you have insurance.

Sent to collections over a disputed bill, or before you even received a bill? One of our readers was able to stop a medical bill from damaging her credit. Other readers have replicated her success.

Help for hospital bills

Hospital bills totaling thousands of dollars aren't unusual. If you get a very large bill you can't afford to pay, you first want to find out whether you are eligible for financial assistance. New rules in the Affordable Care Act offer some protection for patients at nonprofit hospitals.

What if a hospital is pressuring you to pay more than you can afford? After Michelle racked up a $7,000 hospital bill she was told she needed to pay $200 a month, beginning immediately. The problem? On her disability income, that was simply impossible. Michelle needed advice on how to negotiate her bill and to make sure she was getting the financial assistance she needed.

Or maybe you simply believe you were overcharged. Blake was billed almost $2,000 for a short visit to the ER for a sprained pinky finger, and he wanted to know what his options were for protecting his credit if he refused to pay the bill, which he found outrageous.

Another option is to try to negotiate down the balance on a large hospital bill. After he received a $30,000 bill from a visit to the ER when his daughter injured her leg, Brett Goldstein became something of an expert on how to negotiate medical bills.

And if you have been in a car accident, you will need to make sure you aren't blindsided by bills that wind up in collections.

Can Congress help?

Congress is considering the Medical Debt Responsibility Act, proposed legislation that would require medical bills to be removed from credit reports 45 days after they are paid, provided the original amount is $2,500 or less. It has bipartisan support, but has been slow to make its way through the legislative process. The Consumer Financial Protection Bureau is also examining the issue.

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