New Jersey is no longer a standard collection environment. With the enactment of the Louisa Carman Medical Debt Relief Act (July 2024), the state has implemented some of the strictest patient protections in the nation. If your current agency is still relying on credit reporting threats or aggressive wage garnishment, they are walking you into a compliance minefield.
For healthcare CFOs and Revenue Cycle Directors—from the large health systems in Hackensack to private practices in Cherry Hill—the “old way” of collecting is dead. You cannot simply demand payment; you must now navigate a complex flowchart of mandatory payment plans, income-based garnishment bans, and strict interest caps.
We don’t fight these new laws; we have re-engineered our recovery process to function within them, ensuring you get paid without triggering an Attorney General investigation.
Need a Medical Collection Agency in New Jersey? Contact us
Deep Analysis: The 3 New Barriers to Revenue in NJ
The Louisa Carman Act introduced three specific “revenue blockers” that most national agencies are not prepared for.
1. The “600% FPL” Garnishment Ban
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The Law: Effective July 2025, New Jersey prohibits wage garnishment for medical debt if the patient’s income is below 600% of the Federal Poverty Level.
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The Risk: This is not just for “low income” patients. For a family of four, 600% of the FPL is nearly $187,000. This effectively removes the threat of garnishment for the vast majority of your middle-class patients.
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Our Solution: We shift focus away from wage garnishment (which is now often impossible) and towards asset execution (bank levies) and voluntary settlement negotiation based on psychological urgency rather than legal threats.
2. The “Credit Reporting” Blackout
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The Law: Medical debt can no longer be reported to credit bureaus if it is under $500 (regardless of date) or for any services provided after July 22, 2024. Any reported debt that violates this becomes legally void.
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The Risk: The traditional agency tactic of “wrecking their credit score” to force payment is now illegal in New Jersey.
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Our Solution: We rely on direct contact frequencies and attorney-backed demand letters. Since we can’t hurt their credit score, we use the “nuisance factor” of consistent, compliant professional follow-up to drive payment.
3. The Mandatory 120-Day “Freeze”
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The Law: You cannot engage in any collection actions until 120 days after the first bill is sent. During this time, you must offer a reasonable payment plan (max 3% interest).
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The Risk: Sending an account to collections at “Day 90” (the industry standard) is now a violation of state law.
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Our Solution: We have adjusted our intake API to automatically reject NJ files younger than 120 days, protecting you from accidental “early placement” liability.
Our 4-Step “Garden State” Recovery System
We have calibrated our model to clear the hurdles of N.J.S.A. 2A:44 (Liens) and the new Medical Debt Relief Act.
Phase 1: The “Charity Care” Scrub (Pre-Collection)
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The Strategy: New Jersey regulations (N.J.A.C. 10:52-11.5) strictly mandate that hospitals screen patients for the Charity Care Program before billing.
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The Action: We audit your files to ensure this screening is documented. If a patient claims hardship, we pause collection and help facilitate the Charity Care application. This often results in you getting paid by the State rather than chasing a broke patient.
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Cost: Included in service.
Phase 2: The “Safe Harbor” Outreach (Steps 1 & 2)
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The Strategy: Once the 120-day freeze lifts, we send the legally required “30-Day Pre-Collection Notice” which includes the mandatory statement that the debt will not be reported to credit bureaus.
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The Psychology: We use this notice to offer a “Final Amnesty” payment plan that complies with the state’s new 3% interest cap.
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The Cost: Flat fee (approx. $15/account). You keep 100% of recoveries.
Phase 3: The “Lien & Levy” Escalation (Step 3)
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The Strategy: Since wage garnishment is restricted for many, we look for other liquidity.
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For Accident Cases: We utilize N.J.S.A. 2A:44-41 to file hospital liens with the county clerk. These liens attach specifically to personal injury settlements, ensuring you get paid before the patient receives their check.
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The Cost: 40% contingency.
Phase 4: Strategic Litigation (Step 4)
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The Strategy: For high-income debtors (above the 600% threshold) or those with significant assets, we file suit in the Superior Court of New Jersey. We target bank accounts and property liens, which are often more effective than wage garnishment in NJ anyway.
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The Cost: 50% contingency.
Regional Strategy: One State, Two Markets
We adjust our approach based on the patient’s economic zone.
| Region | Economic Profile | Collection Strategy |
| North Jersey (Bergen/Hudson) | High Income / Commuter | High usage of payment plans. We structure plans to fit the “3% interest” rule, making them attractive alternatives to ignoring the bill. |
| South Jersey (Camden/Gloucester) | Philly Metro / Mixed | Heavy focus on Insurance Cleanup. Many patients here cross state lines for care; we are experts at resolving “Out of Network” disputes with PA-based insurers (like Independence Blue Cross). |
| The Shore (Monmouth/Ocean) | Seasonal / Retail | We time our calls to align with seasonal cash flow for business owners and service workers. |
FAQ: The Executive Summary
Q: Can we charge interest on medical debt in NJ?
A: Yes, but it is capped strictly at 3% per year under the Louisa Carman Act. Charging the old standard of 6-10% is now illegal. We automate this calculation to ensure you never commit usury.
Q: What is the Statute of Limitations?
A: You generally have 6 years to file a lawsuit for unpaid medical bills in New Jersey. However, because you must wait 120 days to start, your effective window is slightly shorter. Speed is critical once that window opens.
Q: How do we handle accident cases (MVA)?
A: New Jersey private hospitals must file a Notice of Lien with the county clerk to secure rights to a settlement. Unlike some states, this must be done meticulously to prevent the “release of claim” by the patient. We handle this filing for you.
Click here for a Free “Louisa Carman Act” Compliance Audit