What is the Statute of Limitations on Medical Bills?

Medical debt is one of the most common forms of consumer debt in the United States, and Illinois is no exception. Many individuals wonder how long creditors or collection agencies have to pursue unpaid medical bills in Illinois. 

The answer lies in the statute of limitations, a legal timeframe that governs how long a creditor has the right to file a lawsuit to collect the debt. If you are struggling with healthcare related financial obligations, medical debt settlement services from a dedicated law firm can provide you with pragmatic solutions. 

How Long Does Medical Debt Last in Illinois?

Many people want to know how long does unpaid medical debt last? In Illinois, the medical debt statute of limitations Illinois depends on whether the obligation is classified as an oral contract or a written contract.

• Written Contracts: Medical bills are generally considered written contracts since patients typically sign forms agreeing to pay for services. In Illinois, the statute of limitations for written contracts is 10 years under 735 ILCS 5/13-206.
• Oral Contracts: If the agreement for medical services is considered an oral contract (less common in medical contexts), the statute of limitations is 5 years under 735 ILCS 5/13-205.

Because most medical debts involve written agreements, Illinois medical bill debt laws typically allow creditors up to 10 years to file a lawsuit to collect unpaid medical bills.

When Does the Clock Start Running?

The statute of limitations begins to run from the date of the last activity on the account. This may be:

• The date of the last payment made on the medical bill.
• The date the bill was originally due and went unpaid.
• The date of the most recent acknowledgment of the debt in writing.

This means that making even a small payment or signing an agreement to pay can restart the clock. Consumers should be cautious about making partial payments on old medical debts without fully understanding the legal consequences. It is prudent to seek legal guidance on debt management in these cases. 

Impact of Debt Collection Agencies

Medical providers may sell unpaid accounts to third-party debt collectors. When this happens, the debt collector steps into the shoes of the original creditor and has the same amount of time under Illinois law to file a lawsuit.

However, debt collectors must also comply with the Fair Debt Collection Practices Act (FDCPA). Under this federal law, they cannot misrepresent the status of the debt or attempt to sue after the statute of limitations has expired. If they do, consumers may have grounds to file a complaint or lawsuit against the collection agency.

Can a Medical Provider or Collector Sue After the Statute of Limitations Expires?

Technically, a creditor or collector can still file a lawsuit after the statute of limitations has expired. However, the debtor has the right to raise the statute of limitations as a defense in court. If properly raised, the court will dismiss the lawsuit.

It is important to note that courts will not automatically dismiss such lawsuits. The debtor must appear in court and assert the statute of limitations defense; otherwise, the creditor may win a default judgment.

Consequences of a Judgment on Medical Debt

If a creditor files within the statute of limitations and obtains a judgment, they gain additional legal tools to enforce repayment. These may include:

• Wage Garnishment: A portion of wages can be withheld until the debt is satisfied.
• Bank Account Levies: Funds may be seized directly from the debtor’s bank account.
• Property Liens: Creditors may place a lien on real estate or other valuable property.

A judgment can also appear on a consumer’s credit report, severely impacting creditworthiness for years.

Distinction Between Statute of Limitations and Credit Reporting

Many consumers confuse the statute of limitations with the period that debts appear on their credit reports issued by credit reporting companies (one of the three major credit bureaus). These are two key aspects to consider:

• Statute of Limitations: In Illinois, creditors generally have 10 years to file a lawsuit on medical debt.
• Credit Reporting Period: Under the Fair Credit Reporting Act (FCRA), most unpaid debts, including medical bills, remain on a credit report for 7 years from the date of the first delinquency.

This means that even if a medical bill no longer appears on a credit report, the creditor may still have the right to sue if the statute of limitations has not expired.

What Happens if You Make a Payment on an Old Medical Bill?

Making a payment on an old medical bill can reset the statute of limitations, giving creditors more time to pursue a lawsuit. This is known as reviving the debt. 

For example: If 8 years have passed on a medical debt classified as a written contract, and you make a payment, the creditor may now have another 10 years from the payment date to sue.

This is why debt collectors may pressure consumers into making small “good faith” payments on old debts. Before making any payment, consumers should verify whether the debt is already beyond the statute of limitations.

Medical Debt and Bankruptcy in Illinois

When managing medical debt becomes impossible or when the settlement options for medical debt are exhausted, individuals may consider bankruptcy to address overwhelming debt. Medical debt is treated as unsecured debt in bankruptcy, similar to credit card debt.

• Chapter 7 Bankruptcy: Allows for the discharge of most unsecured debts, including medical bills, providing a fresh start.
• Chapter 13 Bankruptcy: Allows debtors to reorganize debts into a manageable repayment plan over 3 to 5 years.

Bankruptcy immediately halts collection actions, including a medical debt lawsuit, through the automatic stay. While it has long-term consequences, it can be a powerful tool for individuals drowning in medical debt.

Strategies for Dealing with Medical Debt in Illinois

Even before the statute of limitations runs out, there are debt negotiation strategies consumers can use to manage or eliminate medical debt:

Negotiating with the Medical Provider

Hospitals and clinics may be willing to reduce bills or accept payment plans, especially if the patient demonstrates financial hardship.

Requesting Financial Assistance

Many nonprofit hospitals are required by federal law to offer financial assistance programs for low-income patients.

Validating the Debt

If a collection agency contacts you, request validation of the debt in writing. This forces the collector to prove the debt is valid and that they have the right to collect it.

Reviewing for Billing Errors

Medical bills are often inaccurate. Consumers should carefully review charges and dispute errors.

Seeking Legal Counsel

If a creditor files a lawsuit or threatens legal action, an attorney can help assert defenses, negotiate settlements, or advise on bankruptcy.

Exceptions and Special Situations

While the general statute of limitations for medical debt in Illinois is 10 years for written contracts, there are exceptions and nuances:

• Minors: If medical services are provided to a minor, the statute of limitations may be affected by when the minor reaches the age of majority.
• Fraud or Misrepresentation: If fraud is involved, different limitation periods may apply.
• Judgment on Debt: If a creditor obtains a judgment, the statute of limitations for enforcing that judgment is different (typically 7 years in Illinois), but renewable.

FAQs About Medical Debt in Illinois

Does the statute of limitations erase my medical debt?

No. It only prevents creditors from using the courts to force repayment. The debt may still exist, and collectors may continue to contact you within legal boundaries.

Can a debt collector still call me after the statute of limitations expires?

Yes, but they cannot threaten to sue or misrepresent the enforceability of the debt.

Can a hospital garnish my wages for unpaid bills?

Only if the hospital or creditor sues you and obtains a judgment within the statute of limitations.

Should I ignore old medical debt?

Ignoring debt can be risky, especially if it is still within the statute of limitations. Seeking legal advice or negotiating with creditors is often a safer approach.

DebtPros Legal Team is Here to Help You

At DebtPros, we understand how stressful medical debt can be, especially when creditors and collectors are pursuing aggressive action. Our experienced Chicago bankruptcy attorneys can:

• Review your medical debts to determine whether they are time-barred under Illinois law: Our attorney will carefully analyze the dates of your last payment or account activity to see if the statute of limitations has already expired.
• Protect your rights in court if a creditor attempts to sue after the statute of limitations has expired: If a creditor files a claim after the deadline, our legal team ensures you can raise the statute of limitations defense effectively. 
• Negotiate with creditors to reduce or settle debts: Our skilled attorneys may be able to negotiate with creditors to lower the balance, arrange manageable repayment terms, or secure settlements for less than the full amount owed, helping you regain financial stability.
• Help you explore bankruptcy relief from overwhelming medical bills: Depending on your situation, bankruptcy may offer a fresh start by discharging medical debts or reorganizing them into a structured repayment plan, providing lasting relief.

If you are struggling with medical debt in Illinois, our experienced bankruptcy lawyers at DebtPros are ready to guide and assist you every step of the way. To schedule your free consultation, call us at (312) 847-3475 or contact us online.