If people fail to pay their medical bills or fall behind on any debts they owe to the hospital or medical provider, then this could be the first step that kicks off the collection process. If a patient is unable to agree to a repayment agreement with the hospital, doctor, or medical provider, then the health care professional may take aggressive collection efforts such as taking the patient to court. In some cases it has been known for hospitals or doctors to sell the outstanding debt to a collection agency who will then take them to court.
While unfortunately some medical debt collection agencies may employ illegal practices, at minimum the following may happen to you. The patients wages may be garnished to help pay their bills, their bank accounts or other assets may be seized, and, in some states, even your your home may be foreclosed upon and put up for sale. In addition the unpaid medical debt may linger on your shoulders for many years.
Even for those families and individuals who may be initially exempt from debt collection because they have few assets and a low income, they may discover that, years later, when their financial condition and/or earnings increase, this issue catches up to them. Down the road the medical debt collectors and creditors are back at their door looking for money or they may have already seized their wages or income.
The federal government does have some laws and regulations to aid consumers. The Consumer Credit Protection Act helps protect workers from having all of their income garnished to pay a debt by establishing maximums. In general, for any workweek, the highest percentage of someone’s after tax wages that can be garnished is the lesser of 25 percent of the person’s earnings or the amount of earnings that exceeds 30 times the hourly federal minimum wage. In addition, federal government law also protects some benefits from being garnished to pay medical debts, such as Social Security income.
There are more local rules and regulations too. Below are some of the states, and the laws and programs they have to protect people from aggressive and illegal debt collectors, and to hopefully stop collection agencies in their trackers. Also, find how you can get out of medical debt.
Arkansas: Has established limits on how long medical debt last for
A state law in Arkansas established a regulation in that no action shall be brought to recover charges for medical unpaid medical bills for services performed by a doctor, hospital, or other medical service provider after the expiration of a period that shall last two (2) years. This will start from the date the services were performed or from the date of the most recent partial payment that the patient made for the health care services, whichever is later.
Kansas: Wage garnishment during an illness is illegal
If the patient has been unable to work for two or more weeks because of their own personal illness or an illness in their family, the debtors wages cannot be garnished until two months after recovery from the illness. This will provide the family time and it will stop debt collectors while someone is still sick.
Louisiana: A foreclosure of a home can’t occur if the patient has a catastrophic or terminal illnesses
If the debtor has medical debts from a catastrophic or terminal illness or injury, the full value of that person’s home is exempt from foreclosure or seizure or sale.
North Carolina: A hospital can’t garnish a patients wages in certain cases
Public hospitals can’t seek to garnish the wages of patients whose total household income is 200 percent of federal government poverty levels or less. There are protections for higher income people as well, as for individuals with higher incomes, a hospital can’t move for wage garnishment unless it has made reasonable efforts to collect the unpaid medical bills and debts from third party payers (such a a health insurer) and the doctor or hospital also needs to have waited at least 120 days after sending the patient the bill.
In addition to these regulations, another that can help stop medical debt collectors is a law that says a court cannot order garnishment of a debtors wages if the individual is paying at least 10 percent of his or her monthly income toward paying the debt. There is another option as well that can protect consumers, and this is if the debtor themself is still pursuing payment for the expense from a different, unrelated third party.
Nevada and Ohio: Can’t foreclosure on an owner occupied home
If you live in Ohio or Nevada, your home can’t be seized or sold for unpaid medical debt. In addition, it can’t be foreclosed upon, while the debtor and/or the their dependents still live in the home.
Ohio: Debt collection in case of divorce
If the court system has required that someone needs to provide a child or an ex-spouse with health insurance and benefits, and if that person has failed to do so, a medical provider or debt collection agency can collect unpaid bills only from the person so ordered. This in effect protects the wider family as they can’t try to collect from the ex-spouse or the child.
Texas: No collection can occur on a debt if the provider didn’t bill the patient in a timely manner
Basically if the hospital, doctor, or medical provider failed to bill the health insurer or the patient in a timely manner, the medical provider can’t attempt to collect the debt from the patient that had the services performed on them. This will limit surprises and those instances in people owing money that they never knew about.
Virginia: No collection is allowed while certain claims are pending
In those cases in which the patient has made claims for medical treatment through either worker’s compensation or crime victims’ compensation, the health care providers can’t try to collect the outstanding debts for those health care services. Also, they can’t refer those outstanding debts to a collection agency or a third party until worker’s or crime victims’ compensation has determined the amount that they will pay.
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