Debt Recovery

Approximately 20% of Americans with credit reports have medical debt. Over 70 million Americans go into debt as a result of medical bills. Within Indiana, 48,000 and 64,000 people ages 18-64 have medical debt exceeding $10,000. That means between 1% and 1.7% of people in Indiana have excessive medical debt that may never be paid back. This problem of medical debt is only growing in the United States, leaving the patient, doctors and hospitals suffering the consequences. Medical debt is a significant issue for many consumers. Hospital bills, medication costs, and other healthcare expenses can pile up, especially for those without adequate insurance.

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Even with health insurance, patients often find that their policies do not cover all the costs. High deductibles, copayments, and services not covered by insurance policies can result in significant out-of-pocket expenses.

When an individual owes a certain amount of money that must go towards medical bills, that person is understood as being in medical debt. When that individual’s medical debt obligation grows, with little evidence pointing towards it being paid off, the obligation to obtain the money owed goes to a collection agency. Even though every individual is required to pay their medical debt, laws on the federal level protect debtors under the Fair Debt Collection Practices Act.

Indiana Medical Debt Collection Laws

Indiana’s debt collection laws are similar to the federal laws concerning medical debt. Any medical debt incurred by an Indiana resident is covered under federal and Indiana state statutes regarding debt collections.

For hospitals and doctors looking to recover costs, there is a certain period in which a patient’s medical debt can be legally collectible. Once debts become outstanding beyond the statute of limitations, they can no longer be collected legally. In Indiana, the statute of limitations is ten years. This goes for any written contract stating details of payments to be made.

To collect payment for medical debt, there are also specific rules and practices which must be adhered to. If the medical debt is large, creditors can turn over the case to a debt collection agency. This agency will attempt to communicate with the debtor by phone, email, mail, or fax. They may only attempt to contact the debtor between 8 AM and 9 PM. They are not allowed to call during working hours if they know the debtor’s employer does not allow personal calls.

Within five days of the initial contact a debt collections agency has with a debtor, an official notice must be provided to them. This notice must include a conversation statement, the amount of medical debt the debtor owes, and the parties to whom that debt is owed. It is against the law for a debt collection agency or its agents to act in a harassing or intimidating manner.

Recovering money on the past due accounts of patients can sometimes be challenging. However, some steps can be taken to recover the money debtors owe hospitals, doctors, clinics, and other medical specialists and groups. While using these methods, debt collection requires handling sensitive information in a way that does not breach HIPAA laws and regulations regarding Protected Health Information.

Healthcare in the United States is expensive and residents in Missouri are deeply affected by the burden of health care costs. According to the Commonwealth Fund state data center, Missouri is ranked eighth worst in healthcare among the fifty US states.

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Overdue medical bills can result in severe cash flow issues for doctors. They must transfer accounts to a HIPAA collection agency after 60-90 days of non-payment. Debt collection agencies operating in Missouri must be licensed and bonded. The state of Indiana has its own laws that regulate debt collection practices. These laws often mirror the FDCPA but may provide additional protections or requirements.

If a consumer disputes a debt in writing within 30 days of the first communication from the debt collector, the debt collector must stop collection efforts until they have provided verification of the debt.

A survey conducted by the Research Triangle Institute showed that about twenty percent of adults between the ages of 19 to 64 are uninsured in Missouri. This means that about a million people, including children, live in households carrying medical debt. The process of medical debt collection significantly affects patients and medical providers such as doctors, clinics and hospitals in Missouri. They provide valuable patient services and must be reimbursed appropriately to continue providing high-quality clinical services. Healthcare workers and debt collection agencies in Missouri should clearly understand the laws and regulations for medical debt collection to avoid getting sued if they violate a federal debt collection law.

Missouri does not have state-specific laws for medical debt collection. Debt collection agencies operating in Missouri must comply with the Federal Fair Debt Collection Practices Act. This law protects patients from undergoing harassment and abuse as a result of debt collection.

Under the Fair Debt Collection Practice act, debt collectors are not allowed to call someone before 8 am and after 9 pm. They are also not allowed to call the individual at work if they do not want to be contacted. Debt collectors must keep the information about the debt private and cannot disclose that they are a debt collection agency via mail etc.

When patients cannot pay for the services they receive, lowered provider reimbursements can result in poorer care with poor patient outcomes resulting in a vicious cycle. Medical practices and hospitals can hire collection agencies to recover lost money from non-paying patients.

Along with a lack of insurance coverage, other reasons for nonpaying patients include patients’ lack of education or knowledge about their insurance coverage, rise in healthcare costs, Medicaid cuts, high deductible health plans, other consumer debt such as student loans and credit card payments etc.

If you are a hospital or a doctor’s office, you may use a debt collection agency to ensure you get paid for your services. This is because the staff in a medical setting might not be well-trained in the laws of debt collection. Another reason why medical offices and hospitals also choose to use a debt collection agency is that they may not want their name associated with ethics associated with the actual practice of debt collection from patients who were sick. Here are some things you should remember when sending patient’s accounts to debt collectors:

1. Hospitals and doctors’ offices should have a policy stating when to send a patient’s account to collections. This policy should ideally be shared with patients and signed by them. This is typically 30-60 days.
2. After determining their final insurance coverage, patients’ accounts should be sent to collections.

Handling past due invoices is one of the most unpleasant parts of running a small business. Business owners want immediate payment, but for a variety of reasons, you may have to invoice a customer, creating an account receivable. Depending on your terms with your customers, and industry custom, you might offer trade credit such as net 30, where full payment is due 30 days after purchase. However you handle your invoicing, accounts receivable are inevitable, but not unmanageable with the right resources and strategy. An understanding of your debt collection legal options, in addition to standard billing practices, is essential.

Debt collection is a business and a legal problem too. Companies should create or use systems that help manage the accounts receivable. Legal routes to debt collection are generally more expensive. They can prolong the debt collection process, so they are often last resorts for cases where a debtor refuses to pay or enter into a repayment plan.

Statute of Limitations

For consumer debt, collection agencies ( and creditors) can only sue a debtor if the debt is not too old. This duration varies from 3 years to 10 years depending on the state where the debtor resides. We have a in-depth article about Statute of Limitations.

Legal rights vs. Legal remedies

The legal options for debt collection include communicating with the debtor about the unpaid balance, which involves asserting a legal right to payment in full. To properly talk about the debt, you must have a clear understanding of your legal rights under the contractual agreements used for the underlying transaction. Knowing the terms of your contracts will better prepare you for negotiation and collection before pursuing the next steps. As a business creditor, your legal remedy is to sue the debtor in a court of law.

Suing on a debt involves numerous steps, which can vary depending on the jurisdiction — the laws that govern your transaction with the debtor. In most cases, debt collection cases are under the jurisdiction of state or local courts. Some states have a commercial claims part of their small claims courts, which can fast track the resolution of these matters. There are limits to the amounts in dispute for some of these courts. For example, in New York City, there is a $5,000 limit for commercial claims in small claims court. In Texas, the limit is $10,000.

For consumer debt, if a debtor does not show up in the court, creditor may be eligible for a default favorable judgement.

The steps and timeline of commercial debt lawsuits

The process of enforcing legal rights under a contract depends on the governing law, but in general, suing on debt requires the following steps:

1. Demanding payment. Most courts will require that you prove that you actually asked the debtor to make a payment before commencing a lawsuit. This requirement is important as it ensures that a creditor attempts communication first rather than burdening the court system with numerous trials. In some states, giving notice of 30 days is a legal requirement to sue on a contract.
2. Drafting and filing a complaint. After you’ve demanded the debt, and the debtor has not paid, you can then file a legal complaint with the court. If you are using a small claims part of the court, you may be able to use simple official court forms. The complaint should clearly state the terms of the agreement and the amount due. It also should provide evidence of these matters, such as a copy of the contract, emails about the transaction, and payment histories.
3. Securing a court date. After filing, the court will provide a court date. In some jurisdictions, however, the courts leave this process up to the filer, requiring knowledge of how much notice must be given to the debtor.
4. Serving process. Once you have a court date, the court clerk will tell you if you need to deliver the complaint to the debtor, or if the court will handle the process. Again, each court has its particular rules and procedures.
5. After service. Once served, the debtor, who is now also the defendant in the lawsuit, will have a period to file an answer to the complaint. This period varies, but is generally between 20 and 30 days and can depend on the manner of service. Should the defendant not respond to the complaint, you may be awarded a default judgment.
6. Negotiation. The time after service also is an opportunity for negotiation. In some cases, the filing of the lawsuit will prompt payment in full. In others, the defendant may continue to ignore the matter. It may also trigger a conversation about resolving the case outside of court.
7. Trial or hearing. The ability to settle out of court still will continue until the final judgment. Most judges will require that the parties demonstrate a good faith effort to resolve the matter before trial. If the parties cannot agree, the case will eventually proceed to a hearing or trial. Most commercial small claims do not involve juries, with the judge being the sole decider of fact and law.
8. Judgment. If you win either after a trial or because of a default judgment, your work is still not complete. This entire process can be just the beginning of a post-judgment collection process. Victory means you have an enforceable judgment, which is like the rights under your agreement with teeth — although not as sharp as you’d hope.
9. Post-judgment enforcement. If your debtor is judgment-proof, meaning that they have no assets or are bankrupt, you may end up with little more than a piece of paper. However, a judgment opens the door to the next level of collections: enforcement. With a valid judgment, you may be able to garnish wages, file a lien against property, force the sale of property, execute against bank accounts, and more.

As you can see, even with a simplified commercial small claims court at your disposal, the process is lengthy, complicated, and often does not result in immediate payment. Because of the complexity of debt collection and the legal rights involved, it is advisable to engage the services of a professional debt collection agency. Professional collection firms know the requirements of the various courts, their backlogs, and the likelihood of getting paid.

Being in the medical profession means that you are making people healthier, helping people deal with chronic problems, and saving lives. However, even though those things are huge for the betterment of the community, still medical professionals are also businessmen and must do everything to make their practice profitable.

Making sure you get paid for your services is critical. When you have patients who owe a debt you need to address that. You need to know the laws around medical debt collection and what your options are to recover those unpaid medical bills. Here is everything you need to know about the Georgia Medical Debt collection.

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Medical Debt in Georgia 

Medical debt is a major problem all over the country. About 40% of American adults of working age either have medical bills that they cannot pay or are in the process of paying off. When you add the number of elderly Americans who are also in Medical debt, it adds up to almost 80 million people dealing with this issue. It is so prevalent that medical debt accounts for over 65% of all personal bankruptcy filings in America. Unfortunately, Georgia is one of the states with the worst medical debt issues. They are in the top 5 states of most medical debt with around 30% of the population having unpaid or past-due medical bills.

Georgia Medical Collection Laws

Medical debt collectors in Georgia must follow all the Federal laws related to debt collection such as the Federal Debt Collection Practices Act (FDCPA). Other federal debt collection rules can be found on the Federal Trade Commission website (www.ftc.gov). In Georgia, there are some additional things you need to know as a medical biller.

The Georgia Department of Law Consumer Protection Division states, “According to the Georgia Fair Business Practices Act [O.C.G.A. Section 10-1-393(b)(14)], a hospital or long-term care facility has six business days after you have been released from its care as an inpatient to provide you an itemized statement of all charges for which you are being billed.” Furthermore, under Georgia law, consumers have the right to inquire in advance about estimated charges for routine office visits, routine treatments, and lab tests because there is no regulation or cap on what medical providers can charge for a medical procedure.

 Problems Faced by Doctors and Hospitals in Georgia

These problems with medical debt are both a cause and a symptom of the struggling Georgia Healthcare system in 2019. The Atlanta Journal-Constitution recently published an article about the state of the Georgia healthcare system and found that it had issues and ranked below the national average in many categories. The state ranks 35th in the country in overall healthcare outcomes and 46th in access to quality healthcare and preventive services. Georgia’s uninsured population is about 8% higher than the national average and since 2010, 7 hospitals have closed, the 3rd highest number in the country. Much of this is related to medical debt, as Georgia hospitals reported that in 2017 they delivered around $2 billion of healthcare services they were never paid for.

Medical debt is one of the most talked-about financial topics in society today. As health insurance rates continue to rise and medical bills strain working Americans more, doctors have had to confront this issue more often. They are the face of healthcare that patients most often deal with, and consequently, they are often the people who face the brunt of their patient’s displeasure.

Massachusetts is no exception to this rule. State residents are struggling just like everyone else in the country to keep up with payments on their health insurance, and when an unexpected expense comes up, they struggle to make ends meet and pay off the debt. However, some new laws and regulations have been put in place to help manage the Massachusetts medical collection.

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Massachusetts has laws in place to protect residents from aggressive medical debt collection practices. For example, hospitals are required to offer free care or payment plans before they can take certain actions to collect unpaid medical bills.

Healthcare in Massachusetts

According to recent study, Massachusetts actually has one of the highest healthcare costs in the country, but it actually has one of the lowest average premium costs in the country. The average Massachusetts resident paid a monthly premium of around $385 per month, compared to the national average which is $600 per month. This has to do with the broad enrollment in healthcare that keeps premiums low and a tiered system that offers a variety of price points for people of all socioeconomic backgrounds.

Medical Collection in Massachusetts

The Massachusetts debt collection laws and rules are meant to protect the rights of those in debt. These rules limit the number of times a creditor can contact you; they must identify themselves on the call, and several other rules of conduct. They are not allowed to curse, threaten legal action, or call you after a reasonable hour. In summary, these rules specify that anyone trying to collect medical debt in Massachusetts is expected to behave with respect toward the person they are attempting to collect money from.

What Doctors Can Do About Medical Collection in Massachusetts

Despite the low premiums and debt collection rules, those will always struggle to pay their medical bills. However, there are a few ways that doctors can take action to help their patients pay down their debt and reduce the amount of medical debt.

1. Explain the bills to patients. In the event that a patient calls with a question about their bill, there should be a person in the office who can explain the bill to the patient, point by point, to avoid confusion.
2. Train your staff on how to discuss debt with patients. Your front desk staff are the people who have the most direct line to patient billing as the people who are checking them in and viewing their accounts. There are some ways they can encourage people to make payments as they check them in. For instance, they might ask “You have an outstanding balance on your account; would you like to pay with credit or check?”, as opposed to “Would you like to pay your outstanding balance today?”.
3. Be polite but firm. You can and should be respectful of your patients, but a firm message about repaying outstanding fees is a good way to keep people aware that the medical debt is not going away and needs to be addressed, perhaps even through a payment plan.

Regardless of their financial situation, every patient deserves to be treated with dignity and respect. The subject of medical collection is difficult to address with patients, but as long as you prioritize patient care and offer as much help as you can, your patients will continue to trust and rely on you.

As the end of the year approaches, many eagerly anticipate their tax refunds. The average federal tax refund is around $2,000. And, for the average individual, this amount goes a long way towards annual expenses such as vacations, car repairs, and holiday purchases. Tax refunds can also be used to pay debt, but sometimes, past due bills are not a debtor’s priority after the windfall.

If you are a creditor and your debtor gets a federal tax refund, you might wonder if you can enforce your rights as a creditor and claim part or all of the money. Debt collection laws can be complex at times, but one principle is simple and clear: private creditors (basically any creditor other than a state or the federal government) cannot legally claim rights to a federal tax refund. If someone owes back taxes or a federal debt, the law permits the IRS to offset the refund. State, court-ordered child support arrears and other government debt can also claim rights to refund offset. But private debt holders cannot step in between a debtor and their tax refund

However, the tax refund season can increase a debtor’s cash flow and presents more opportunities to successfully collect on a debt. The biggest part of the collections battle is lack of funds. The best scenario involves positive communication to encourage voluntary payment, while also better informing the creditor so appropriate legal tactics can be enforced, such as knowing when a tax refund might hit a debtor’s account and be attachable. While not automatic like a refund offset, tax refund season can be great for debtors and creditors alike.

Communication instead of litigation

In addition to funds availability, collection success requires communication, timing, and an organized and strategic approach. Legal enforcement, while effective as a last resort, is expensive, difficult to effectively manage, and can give rise to protections that can halt the collections process. Always try to communicate before you end up having to litigate. Legal fees and court costs can eat away at a debtor’s cash, and aggressive legal action can lead a debtor to try to live on a cash basis, hiding money and further avoiding debt repayment. Communication and rapport with a debtor are crucial because they can help a creditor avoid a costly collections process, and encourage a debtor to use some or all of a tax refund to reduce their debt.

The trick is to maintain a professional, friendly, positive, and value-focused relationship with a debtor. Once a debtor sees a creditor as an enemy, it’s much more likely that lines of communication will become severed. In some cases, especially with those who may be experiencing more extreme financial hardship, a debtor can devalue the importance of the debt in their mind. Consistent communication helps return the concept of value to debt.

Debtor communication should be:

• Friendly
• Ethical
• Sympathetic
• Persistent

Here are some tips on how to execute a communication-focused collection process that can take advantage of a debtor’s cash windfall come tax refund time:

Become your debtor’s partner for success

It’s easy for the debtor-creditor relationship to become antagonistic. But, a friendly approach to communication can convey that you are not your debtor’s enemy, rather, you are their partner in helping them through a financial struggle. With a good rapport, you can explain the benefits of paying their debt and better anticipate payment. This friendly approach can even benefit cases where a debtor disputes the amount owed because it will bring that dispute to light rather than let it grow in darkness. And a friendly tone may be the key to learning about an upcoming tax refund and incorporating it into a repayment plan.

Communicate ethically

Debtor communication should not be based on the premise of tricking someone to pay a bill. Clear communication is ethical. Be truthful about the collection process, not threatening. With an ethical approach to communication, you can better explain the benefits of prompt payment. Communicating ethically does not mean that you delay pursuing your legal rights to collect the debt, just that you play by the rules. For example, don’t threaten to take your debtor’s tax refund, rather, communicate with them about the benefits to both of you if all or part of the refund goes towards the debt.

Express sympathy and better relate to the debtor

People generally don’t want to get behind on their bills. Job loss, illness, and many other factors contribute to getting behind on payments. Open communication with a debtor that understands how life can make payment difficult can help a creditor better anticipate repayment.

Persistence is the key

Your debtor may not have the resources today to pay their debt. They may not have it tomorrow. And their tax refund may or may not be available to satisfy the amounts owed to you, but without an organized, well-managed, and persistent communication plan, you will lose touch with your debtor. When out of contact, your debtor might get their tax refund or other cash windfall and direct money to something other than paying your debt.

If there is a running theme throughout successful debt collection, it is persistence. Often, creditors do not have the time to develop the rapport and goals-focused communication skills needed for successful collections. This is where engaging the services of a professional debt collection can have the most impact. A professional collector knows legal requirements and options but also can be a source of constant contact and relationship-building to ensure mutual success.

Tax refunds may not be directly attachable by a private creditor, but a professional debt collection agency can keep the lines of communication open so the debtor’s mindset can be refocused on payment. Better communication plus the prospect of a tax refund can translate to success for both parties.

Contact us if you need a professional debt collection agency to help you recover your overdue bills.