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My medical bill has been sent to a collection agency - they are charging 19% interest monthly on the unpaid balance - can they?

Houston, TX |

Being disabled, I can only afford to pay $25/mo. At this rate, they said it will take me 10 years to pay off the $2400 debt I owe the hospital. I didn't know it was legal to charge interest on a medical bill in Texas. When my son had cancer and we lost ins., we had to pay monthly and no interest was ever charged. Is this a new law? (the only difference is the hospital never sent me to collections when it was my son, this hospital I was in recently sent me to collections because they said they couldn't have this debt on their books longer than six months even though I was paying monthly)

Attorney Answers 2

  1. I am not licensed in your jurisdiction and can not give legal advise, but I can provide general information.

    Typically, a creditor is entitled to have interest on unpaid account receivables. In Florida, medical bills can accrue interest, but I do not know about TX law. Sometimes, the health care providers are really relying on the health insurance benefits and what the patient pays is appreciated but "gravy".

    Similarly, I can not tell you the maximum rate that TX law permits on open accounts. In Florida it is 18% and that is per year, not per month. It may be that the collection agency is in violation of TX law by demanding too much interest--and again, that presumes that TX law permits interest on medical accounts.

    Really, as good as Avvo is for getting a quick bit of advise, it is limiting in that a TX attorney may not see your question. Make a consultation with a TX lawyer in your area.

  2. Unless there is a written agreement signed by the debtor, interest on most debts is limited to 6% per year. With a written agreement, most debts are limited to 18% per year. These limits would apply to medical bills. (There are execeptions for credit card accounts and pawn shops.)

    If a creditor "contracts for, charges or receives" interest over the legal rate, it is called usury, and the penalties in Texas can be very severe. If more than 3x the legal rate is charged, the creditor can lose the right to collect the princial amount of the debt, and be required to pay penalties.

    I suggest you very nicely ask the collection agency for a copy of your contract, and for a complete statement of account showing all charges, payments and credits, so that you can confirm what the charges are for, and determine the best course of action. This information may prove a good usury claim.