Debt Collection Problems

Debt Collection Laws

Medical Bills & Debt Collection

Injuries and illnesses can occur at the worst times and can take its toll on the individual's and the family's pocketbook.  Even if the patient has insurance, it is rare that the insurance covers the entire bill, leaving a portion for the patient.  Sometimes that smaller portion is still too much for the patient, and the medical facility is not equipped to handle long term payment plans.  As such, many hospital and medical bills end up in the hands of a debt collection agency. 

Often these debts are considered formed by contract:  Medical bills tend to be deemed contractual in nature though there is not always a signed agreement for the work.  Indeed the patient often signs forms allowing for the treatment and promising to cover what their insurance does not. However, sometimes the patient is unable to enter into any such agreement at the time of treatment because of emergency or incapacity.  Still, often the law finds that an implied contract is formed.  Also, there are different laws in each state with respect to whether interest can be added upon an unpaid medical bill absent an agreement between patient and provider. 

There may be interest tacked on in some instances:  Some states provide that an unpaid medical bill carries with it a certain interest rate on an unpaid balance.  Each state is different with respect to not only whether interest can be charged, but the rate chargeable as well.  You should consult your own state's laws to find out.

Lawsuits are filed to collect these debts:  Many medical bills go through a campaign of collections by debt collectors wherein calls are placed and threats of court action are made to frighten the consumer into coming up with more money.  There have been reports of many Fair Debt Collection Practices Act violations by collectors of medical bills.  Still, the ultimate weapon for the collector of a medical bill is the filing of a lawsuit.  If the statute of limitations has not run on the bill (each state has a different limit of time in which a lawsuit can be filed, some have specific periods for medical bills and some consider them contracts) the medical facility can hire a debt collection lawyer and file a lawsuit. The lawsuit must be served upon the debtor according to the service of process rules of the state in which the consumer resides.  Then, the consumer can defend the lawsuit by asserting various defenses such as that the amount sought after is incorrect or has been paid to name just a few.  If the case is not properly defended, then the medical facility will obtain a judgment in its favor.  When the medical facility has a judgment, it may seek involuntary means to force payment such as wage garnishment, asset attachment or lien on property.  If your rights were violated by a medical bill collector - click for free case review