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By Gregory D. Swope
Originally Published in Canton Akron Edition of MD News Magazine
July/August 2005
According to a recent, well-publicized and disputed study, medical bills are the primary reason that a majority of people file bankruptcy. Whether or not that study was accurate, there is no question that for many medical professionals, the collection of delinquent fees is an issue.
Many medical professionals use collection agencies to recover severely delinquent fees. While collection agencies can work, depending upon the case, it might be more expeditious to engage the local courts instead. After all, if a patient refuses to pay, ultimately you will end up in court if you want to enforce payment of the debt.
Obtaining a judgment in court allows the creditor to attach nonexempt property, garnish wages and file liens on real estate. While there are some costs to engaging the courts, such as court costs and attorney fees, once suit is filed, the clock starts ticking on when collection activities can begin. In many collection suits, the debtor has no defense and therefore files no answer with the court within 28 days from service of the suit, enabling the creditor to obtain a default judgment. The judgment is what enables a creditor to attach the property of a debtor.
Of course, a creditor should consider the debtor before deciding which tact to take. It might be better to let the collection agencies deal with debtors who owe small amounts, are low income or unemployed and who own no assets, because there is no property to attach and a wage garnishment might force them into a bankruptcy, prohibiting collection activities. In such cases, the debtor might make small monthly payments simply to keep the collection agency from calling them.
On the other hand, when a debtor has steady employment and owns real estate (a quick check of the Auditor’s website will tell you this) but for whatever reason are avoiding paying the debt, a suit gives you the best opportunity to quickly collect. Generally, a debtor that can afford to pay will once they are sued to avoid wage garnishment or a lien on their house that must be dealt with before the owner can sell the home. Another reason to seek judgment quickly is that under law when real estate is sold at a foreclosure, a creditor’s order of priority – determined by the date judgment liens are obtained – determines who will get paid. The farther down the priority list a creditor is, the less likely there will be enough proceeds to pay that creditor.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.