Master Medical Debt Lawsuits in 10 Easy Steps
By Attorney Ginger Kelly, July 19, 2018
Being sued by a debt collector or service provider over medical debt is no picnic. If you can’t afford to pay the initial debt, it is likely that you still can’t pay it. Going to court is also very stressful, time consuming and costs you time off from work and other more important things. These are things we all worry about.
Although you may be tempted to ignore a medical debt law suit you know you can’t pay, it is always best to show up. If you ignore the law suit, the other side wins, automatically by default. A default Judgment will haunt you and your credit report for twenty years in Massachusetts.
What happens when you show up for court? Below are 10 steps that you can take if you are facing a medical debt lawsuit.
- Find out where the debt comes from
You cannot properly talk about your lawsuit until you fully understand why you are being sued. Past bills should tell you something about the debt. Find a date of service and, perhaps, an itemized list of what services were given to you that you are being charged for.
- Answer the lawsuit
In most medical debt and other consumer debt cases, people don’t have an attorney. Hiring an attorney is a wise move, so seek a free first consultation with a lawyer before you hire them. Sometimes, a lawyer can help you to represent yourself.
Many times, when people meet certain income guidelines, they can apply for free legal aid. Worcester Community Legal Aid services is an example of one of many nonprofit public service centers, helping clients with free and reduced fee legal services for debt collection law suits. Many times, a limited service lawyer will be at the courthouse to help clients. Call and find out when this free service is available.
- Prepare for court
The next step to take is to prepare to answer your lawsuit. In Massachusetts a defendant has twenty days from the date of notice to answer a small claims or civil suit. Answering a law suit involves filling out paperwork at the court, which will involve answering every paragraph and including all your legal defenses along with a certificate of service saying that you mailed a copy to the other side. Then, you have to mail the paperwork to the other side who is suing you. Next, show up at the initial court date. After you answer the suit, the court will set a date for the discovery part of the trial. It is very helpful to find a lawyer who can advise you regarding this process.
It’s important to make this initial court date. Traditionally, in Massachusetts, this is called a discovery or pre-trial conference where you have time to talk to the other side and see if you can make a deal. It’s helpful to ask for a payment plan and a reduction of the debt. At this stage of the game, it is unlikely that the judge will grant you a continuance that would move the court date further out. It’s probably best not to ask unless you live out of the jurisdiction and you would like to get counsel to move the suit to a better place where you can defend.
At the discovery part of your lawsuit, you will have to file more paperwork about your finances and will need to sit and wait to talk to someone. This is not the time to present evidence that you are not liable for the debt. If you are not liable, you can present this evidence at hearing. This means, you will need to show up another time for hearing.
- Know about wage garnishment
If at hearing, you are found liable for the debt, or if you failed to answer the lawsuit and the judge rules against you, the court may issue a judgment order and an execution, giving the lender or collection agency the ability to garnish your wages. Social security benefits, disability insurance payments, unemployment, VA benefits and other things, like public assistance and child support are excluded from garnishment. If you have any of these forms of income, it’s wise to set up a different bank account where those funds are deposited and keep all garnishable wages in another separate account. Do not mix these funds with other things like regular wages.
By federal law, the lender or collection agency can’t take more than 75% of your income. Based on Massachusetts law, which is more protective, creditors can take only 15% before taxes or other deductions, or they can take your disposable income less 50 times the greater of the federal or Massachusetts minimum wage. Effective January 1, 2017, the Massachusetts minimum wage is $11 per hour. This means that any amount exceeding $550 per week can be garnished from your wages, in Massachusetts.
Also, under Massachusetts law, some medical institutions can take your tax return refund to pay past due bills. It’s better to take care of them before your tax refund is levied.
- Were you served properly?
Sometimes wages are garnished before the plaintiff is even aware that there’s a lawsuit against them. This happens most commonly when you’re improperly served. Examples of using “improperly served” as a legal defense include papers being only mailed to you and not delivered in person, papers being left at an incorrect residence, or papers being mailed to an old address. Being “improperly served” does not mean that the papers were left with a family member or friend at your residence and they forgot to tell you about it. If that happened, you’re still on the hook.
If you have been improperly served, or if you find out that the court mistakenly started garnishing wages because you have the same name as an actual plaintiff, you should contact a lawyer immediately. Find out what possible resources there may be for you in your situation.
- Get low-cost or free help from financial assistance programs
Under the Affordable Care Act, these hospitals must provide some type of financial assistance program to low-income patients. Even if you aren’t from a low-income household, you should apply, as some hospitals extend their programs far beyond the poverty line. Many hospitals also extend this program to insured patients.
- Discriminatory pricing
If you are being sued in court and are uninsured, discriminatory pricing can serve as a defense. If you qualify for the hospital’s financial assistance program, the hospital must legally reduce your bill to the amount generally billed to insured patients.
- Look out for balance billing
Balance billing happens when your hospital or medical provider bills you instead of or in addition to Medicaid or Medicare. It’s a forbidden practice, and you are not responsible for any amounts due when this happens.
You may be able to identity balance billing if you receive an “Explanation of Benefits” from your insurer that states the amount they covered and the amount you still owe. If this does not match the bill your medical provider sent you, there is a cause for concern. Additionally, if the bill you receive does not show any payment from your insurance when you are, in fact, on Medicaid or Medicare, it may be a sign that you are a victim of balance billing.
- Stop lawsuits before they start
If something about your bill doesn’t look quite right, there are ways to reduce it to its fair amount. Debt collectors, hospitals, and other medical providers don’t want to take you to court. It costs them money, and the odds of them actually getting a full payment at that point are very low. They are almost always willing to work with you before issuing a lawsuit. Negotiate. Apply for financial assistance. Set up a no interest payment plan directly with your health care provider. Keeping the lines of communication open is the best way to avoid costly litigation and compounded interest and fees.
If you didn’t have insurance at the time of service, a good idea is to contact the doctor or debt collection agency and try to negotiate the bill down to Medicaid/Medicare prices. This should save you at least one to two thirds the initial cost. If a provider doesn’t want to negotiated, your attorney can use, “discriminatory pricing: as a legal defense in court.
- Weigh bankruptcy
There may come a point in the process to consider bankruptcy as an option. Filing for bankruptcy may alleviate the medical debt and all your other bills. However, as a cautionary measure, bankruptcy is not a decision to take lightly. A chapter 7 will remain on your credit reports for up to 8 years and make it difficult to qualify for new credit with a low interest rate.
There are two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is a form of liquidation. If you qualify, a Chapter 7 bankruptcy requires you to sell off all of your non-exempt assets to settle what you can of your debt obligations. If you don’t have any non-exempt assets, this part probably doesn’t matter much. What does matter is that most of your debt, if not all, will disappear after you receive your discharge.
A chapter 13 Bankruptcy is a type of reorganization of your debts. In a Chapter 13, you do not have to sell off any assets, but the debt won’t disappear either. Instead, you will pay your debt from your disposable income via a 3-5 year payment plan. After the 3 or 5 year plan is over, the rest of any qualifying debt you could not pay out of your payment plan is discharged.
Filing for bankruptcy makes sense if the court has already issued an order to garnish your wages. However, at any other point in your situation, it makes good sense to try to negotiate and set up a payment plan with the medical service provider or debt collection agency directly.
A debt collection agencies last resort is wage garnishment, but it doesn’t have to come down to this. By knowing your rights and negotiating, effectively, rather than damaging your credit scores, you may have a good chance to work through a win-win situation.
If you are contemplating bankruptcy, and have some questions about wage garnishment or medical debt, Attorney Ginger Kelly is now accepting clients in the Dudley, Webster, Sturbridge, Fiskdale, Southbridge, Saundersdale, Oxford, Charlton, Auburn, Leicester, Spencer, Brookfield, East Brookfield, West Brookfield, Warren, Brimfield, Wales, Palmer and Holland. We can explore whether or not bankruptcy is the easy way out or not. Our office is a quiet and comfortable place to talk and a free pot of coffee will be waiting for you when you arrive.
ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit, http://www.attorneykelly.com or call us at (508) 784-1444.
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