Before you respond to a medical debt lawsuit, take these 10 steps

Published: Friday, September 29, 2017 @ 10:57 AM

If you’ve ever been sued by a debt collector or service provider over medical debt, you know how stressful it can be. If you couldn’t afford to pay the original debt, you likely still can’t afford it. And if you want to defend yourself, you’ll have to face the additional time and cost of going to court, too.

You should know that you’re not alone. According to staff attorney Chi Chi Wu of the National Consumer Law Center, when you look at debt collection items on credit reports in America, “half of those items are from medical debt. Not credit cards. Not auto loans. Medical debt.”

You may be tempted to ignore the suit since you know you can’t pay, but Wu advises against inaction.

“Always show up,” she says. “Never ignore a lawsuit. If you ignore it, the debt collector or service provider on the other side automatically wins by default.”

What happens when you show up, though? Here are 10 steps to take if you’re facing a medical debt lawsuit.

10 steps to take if you’re facing a medical debt lawsuit

1. Find out where the debt comes from

You cannot properly address your lawsuit if you don’t understand where the debt comes from. If you look back at your past bills, you should be able to find a date of service and itemized list of services rendered with associated costs.

You may be in debt because you’re uninsured, but even insured patients end up in this boat thanks in part to a rise in high-deductible health plans. Mistakes can happen as well. If a patient visits an in-network hospital, but is unknowingly seen by an out-of-network doctor, they can be charged out-of-network fees. Doctors are independent contractors, so while the hospital may be affiliated with your insurance company, that doesn’t mean your service provider is inherently in-network.

2. Don’t ignore the lawsuit

In most consumer debt cases, consumers don’t have an attorney at all. But hiring an attorney to advise you can be a wise move. It doesn’t have to cost a fortune either, Wu says.

Most lawyers will provide a free consult before taking you on as a client. In this consult, they may be able to help you find your bearings so you can represent yourself.

Wu recommends seeking help from the Legal Services Corporation, a government-supervised nonprofit that provides legal representation at a low cost to low-income households. You can also seek help from nonprofit legal assistance firms in your area.

If you’re uninsured, one way to keep the case from going to court is to contact the doctor or debt collector immediately to negotiate your bill down to Medicaid/Medicare prices — which are often 2-3 times less than that of the gross price you were billed. When a provider refuses to negotiate down to these lower rates, it is called “discriminatory pricing,” and your legal counsel may recommend using it as a defense in court.

3. Prepare for court

The first thing you must do is prepare an answer to the lawsuit, including any defenses or countersuits that you want to raise. This will involve filing paperwork at the court, mailing paperwork, and showing up on your initial court date. Again, it’s advisable to get a lawyer to help you through this, or at least get a consult. The National Association of Consumer Advocates has a helpful video explainer on preparing to defend a medical debt lawsuit.

It’s important to make this initial court date. It is very unlikely the judge will grant you a continuance that would move the court date further out.

There are some exceptions to this. If you are being sued in a state in which you no longer reside, it’s easier to mount a defense if you can’t appear in court. In fact, appearing in court could work against you, demonstrating to the court that you have no problem traveling to and from court out of state.

If you’ve been served in a state outside of your own, it is very important to get legal representation.

This is because you must answer the suit, but you must also do so in a way that does not imply that you are submitting to that court’s jurisdiction over you. The process is one that is best handled by someone trained in law.

After you answer the suit, the court will set a date for the discovery part of the trial. You will have to file more paperwork with the court before this date so that you are able to present evidence that you are not liable for the debt.

RELATED: 8 ways to afford dental care on a fixed income

4. Understand wage garnishment

If you are found liable for the debt, or you fail to answer the lawsuit and the judge rules against you, the court may issue an order giving the lender or collection agency the ability to garnish your wages. By federal law, they cannot leave you with less than 75% of your income or $217.50 per week — whichever is greater. State law may protect you even further.

Medical debt collectors are able to garnish your wages, but they cannot garnish Social Security benefits, disability insurance payments, unemployment insurance payments, VA benefits, pension distributions, child support payments, or public assistance benefits. 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.

You should do this because a court order can go after your bank account balances, too. While that doesn’t make it legal to take money that came from any of these protected sources, separate bank accounts will make the incidence of errors smaller — saving you headaches and potential victimization.

5. Know your rights

When it comes to medical billing and debts, you do have rights as a patient. Make sure you understand them so you can lower or eliminate your bill before or after you’ve been sued.

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 to figure out what possible recourses there may be for your specific situation.

RELATED: Know your rights to fight back against debt collectors

6. Get low-cost or free help from financial assistance programs

In 2016, about 58% of community hospitals in the U.S. were not-for-profit, according to the American Hospital Association. This gives them tax-exempt status, but also obligates them to give back to their communities. 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.

RELATED: How to get help with medical debt

These hospitals have an obligation to let you know about their financial assistance programs within four months of when your bill has been issued.

You have until eight months after the initial bill was issued to apply for financial assistance. You have the right to do this even if the debt has been sold to a third-party collector, and even if that collector is the one suing you in court.

7. Be aware of discriminatory pricing

We’ve already touched on the fact that you can try to negotiate your medical bills down to Medicaid/Medicare prices. 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, they legally must reduce your bill to the amount generally billed to insured patients.

8. 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.

RELATED: How a medical billing advocate can reduce your costs

9. Stop lawsuits before they begin

If something about your bill doesn’t look quite right, there are ways to reduce it to its fair amount.

First of all, make sure the hospital didn’t make an error that resulted in a larger bill. One way this could happen is if something they did caused you to have to stay in the hospital an extra night, inflating your costs beyond what they should have been originally.

Another good avenue to pursue is to have your bill examined by a medical bill advocate. They’re familiar with coding and laws that you’re not, making them the perfect people to review your charges. You may find one in your community by asking around, or you can start your search with the National Association of Healthcare Advocacy Consultants.

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 zero-interest payment plans directly with your health care provider.

Keep the lines of communication open so that no one ends up with the additional costs of litigation.

10. Weigh bankruptcy

At any point in this process, you can choose to file for bankruptcy. Filing for bankruptcy may alleviate the medical debt. Just be cautious. Bankruptcy is not a decision that should be made lightly, as it will remain on your credit report for up to 10 years and make it difficult to qualify for new credit.

There are two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 requires you to sell off all of your assets to settle what you can of your debt obligations. If you don’t have any or many assets, that aspect of it doesn’t matter much. What will matter is that the debt will essentially disappear after you file.

If you file for Chapter 13, you do not have to sell off any assets, but the debt won’t disappear either. Instead, you’ll be put on a 3-5 year payment plan in order to settle.

This may make sense if the court has already issued an order against your wages, but at any other point in your case, it would make more sense to try to set up a payment plan with the medical service provider or debt collection agency directly. Their last resort is wage garnishment. Don’t let it get that far. Know your rights so you can negotiate with them effectively rather than damaging your credit report through Chapter 13 bankruptcy.

Beware of this trick debt collectors use to get your money!

This article originally appeared on MagnifyMoney.com.

5 key things you should know about car insurance

Published: Thursday, October 19, 2017 @ 2:46 PM

The following are five things you probably don't know about auto insurance It may cover more than you realize Your car's contents were stolen or damaged? Too bad Other drivers in your house need to be listed on the policy Your rates could go up because of an accident that wasn't your fault You may be missing out on some discounts

Car insurance isn't something you probably think about often, but it's an important tool in protecting your assets.

It pays to learn about your policy before you need it so you can take advantage of its benefits and avoid any unpleasant surprises.

Whether you're shopping for a new policy or are wondering about the specifics of your current coverage, you may be surprised by what you find.

RELATED: 5 ways you can make bank with your wheels

The following are five things you probably don't know about auto insurance:

It may cover more than you realize.

If your car is damaged when a rodent chews through some wires, your expenses will most likely be covered, according to the Motley Fool. Your auto insurer may also pay for damage suffered when your car hits a pothole, and, although you probably won't need it, damage from a riot or meteor. And if you're involved in legal action as the result of a vehicle accident, your car insurance may also provide help with some legal costs.

RELATED: 8 ways to get the cheapest car insurance possible

Your car's contents were stolen or damaged? Too bad.

If you're like many people, you might have several expensive items – your phone, laptop and navigation system – that you often leave in your car. Unfortunately, if you're in an accident and these items are damaged, you're probably on your own when it comes to replacing them, U.S. News & World Report warns. The same is true if your car is stolen while the items are inside.

Other drivers in your house need to be listed on the policy.

In most cases, a car insurance policy provides coverage for you and other people who don't live with you but may occasionally drive your car, according to Business Insider. But if you have other drivers in your home, they will need to be listed on your policy as well. Otherwise, they probably won't be covered if they drive your car and are in an accident.

Your rates could go up because of an accident that wasn't your fault.

The Consumer Federation of America (CFA) found that many companies will raise your rates if you open a claim, even if you're not at fault. The practice is illegal in at least two states (California and Oklahoma), but drivers who live elsewhere are not protected. Companies vary in how much they'll raise your rates, and the CFA found that moderate-income drivers often face higher increases than higher-income drivers do.

You may be missing out on some discounts.

You might be getting a discount for being a good driver or because you're in a certain age group, but you may be missing out on some less-obvious discounts. According to Fox Business, some insurance companies offer discounts if you belong to certain professional groups, are a graduate of a certain college or belonged to one of its affiliated fraternities or sororities. 

Numbers don’t lie: 5 things to know about your FICO score

Published: Tuesday, October 03, 2017 @ 10:37 AM
Updated: Tuesday, October 03, 2017 @ 10:37 AM

To get into the all-important "good credit" score range, experts recommend these five strategies Check and re-check your credit report Avoid quick-fix promises Delinquent payments can seriously damage your FICO scores Pay off more of what you owe Apply for credit cards one at a time

With the 2017 hacking of credit bureau Equifax, credit scores have been in the spotlight recently. But credit scores are important every day for adults who earn or borrow money, especially the FICO score, which is used by 90 of the top 100 largest U.S. financial institutions. 

RELATED: Equifax data breach: What to know

Just what is a FICO score? The short answer: the global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries, created by Fair Isaac Corporation. The average adult has FICO scores from each of the three main credit bureaus: Equifax, TransUnion and Experian. FICO scores are based on amounts owed (30 percent), new credit (10 percent), length of credit history (15 percent), payment history (35 percent) and credit mix (10 percent).

A low FICO score might contribute to a lender's decision to deny you credit and could increase the cost of an auto loan by almost $5,000, according to Consumer Reports. A high FICO can save you thousands annually on everything from reduced credit card interest to the size of the deposit you must pay for electric utility service.

RELATED: Uber isn't everything: 7 other lucrative part-time side gigs 

To get into the all-important "good credit" score range, Consumer Reports and myFICO.com recommend these five strategies:

Atlanta-based consumer credit reporting agency Equifax reversed a decision to include forced arbitration language in its terms of service for its free credit monitoring products after a public outcry earlier this month. The company said a breach of its computer systems had exposed the Social Security numbers and birthdates of up to 143 million U.S. consumers. (Dreamstime/TNS)(The Atlanta Journal-Constitution)

Check and re-check your credit report

Request one free credit report from a different reporting agency every four months through AnnualCreditReport.com and check for errors, according to Consumer Reports. If you find an error, dispute it with the credit bureau. Pay particular attention to make sure no one has incorrectly listed a late payment on any of your accounts or miscalculated amounts owed on any open accounts. "Hard pull" credit inquiries, which are made by potential lenders with your permission, can lower your FICO score slightly, but this is different. When you check on your own credit, there's no penalty. 

Avoid quick-fix promises

According to myFICO.com, so-called "quick fix" efforts to repair your credit history are the most likely to backfire, so consumers should be leery of any advertisements or credit counselors claiming they can improve your credit score fast. Depending on the reason for a low score, you may need 12 to 24 months before any efforts (except for error corrections) start showing on your score. You can accelerate the improvement by enrolling in a debt-management program and making payments on time, but there's no instant fix.

(Contributed by nestiny.com/For the AJC)

Persistently pay your bills on time

Even if you are only missing payments by a few days, delinquent payments can seriously damage your FICO scores, particularly since you can't fix previous missed or late payments. If you have missed payments, get current and stay current so you can demonstrate that the problem is in the past. Accoding to myFICO, older credit problems count for less and will fade as your new on-time payment pattern starts showing up on your credit report. Some older versions of FICO keep collection accounts on your credit report for up to seven years even if they're paid off, but the most current versions of FICO ignore any collections when the balance is zero, according to Consumer Reports.

Pay off more of what you owe

The "amounts owed" category makes up 30 percent to your FICO score calculation. Unlike payment history, you can address it immediately, but you'll need financial discipline: "The most effective way to improve your credit scores in this area is by paying down your revolving–credit card–debt." Don't close unused credit cards as a short-term plan to up your scores, since it may just increase the percentage of available credit you are using - a no-no for high credit scores. The same goes for opening a new credit cards you don't need: while it will increase your available credit, it could negatively impact the average age of your credit accounts and damage your FICO scores.

Apply for credit cards one at a time

When you apply for multiple credit cards at the same time, you generate several "hard pull" requests for your credit history, which can hurt your FICO score, according to Consumer Reports. This advice only holds true for credit cards, not house, car or student loans. 

MyFICO also reminds consumers that while FICO scores are important, they're not the be-all and end-all. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history and your credit history. Based on their perception of this information, as well as their specific underwriting policies, lenders may extend credit to you even if your score is low - or decline your request for credit even though your score is high.

To get started improving your FICO score, access myFICO's estimator tool, which helps you approximate your score range without any identifying information. It also offers a direct link that allows you to file an online credit report dispute and gives more detailed answers to the question "What is FICO?"

Disney theme park attendance drops as prices rise

Published: Sunday, June 04, 2017 @ 12:12 PM

Sunday marks an increase in prices for single-day tickets to Walt Disney World theme parks during certain times of year—as well as an addition of expiration dates on all tickets.

Could the House of Mouse be faltering?

In a rare reversal of attendance growth, a new report says fewer people came to 13 of 14 Disney theme parks worldwide in 2016 than in the year prior.

That’s according to independent numbers from the Themed Entertainment Association (TEA) and engineering firm Aecom. Disney does not share official attendance data for the majority of its properties.

Here’s a wild guess — maybe Disney’s endless march of increased ticket prices had something to do with the traffic decline!

Read more: How to visit Disney World for free (or close to it)

You can still save money on Disney if you know how!

Back in February, Disney jacked up its peak pricing strategy in a continuing effort to shift the price of a day pass based on demand.

It’s called “seasonal pricing,” and there are three periods: Value, regular and peak.

  • Value period pricing for the Magic Kingdom became $107 for adults and $101 for children — an increase of $2.
  • Regular period pricing became $115 for adults and $109 for children — a $5 increase.
  • Peak pricing, meanwhile, remained steady at $124 for adults and $118 for children.

Meanwhile, the price of an annual pass also increased in February. The Silver Pass is now priced at $419, the Gold Pass at $559 and the Platinum Pass at $679.

The peak pricing strategy seems to be working from a profit standpoint. Disney’s theme park unit enjoyed operating income of $3.3 billion in fiscal 2016. That’s a 9% increase from the year prior.

So don’t shed a tear for the House of Mouse just because guest traffic slowed down last year!

Disney Theme Parks is still the #1 theme park group in the world. According to the TEA report, Disney had twice the annual attendance of its next nearest competitor, the British-based theme parks operator Merlin Entertainments. And it had more than three times the attendance of the #3 competitor, Universal Parks and Resorts.

When you’re planning a Disney trip, you need every possible advantage on your side to save money. So don’t overlook these areas of savings…

Figure out the cheapest places to stay

If you want to stay on the property, try renting a timeshare. MouseOwners.com has resources for both owners and potential renters. MouseSavers.com also features a lot of info on how to save on the experience.

If you’re going to Disney World, you might consider off-site hotels around Orlando like the Four Season Orlando and Hard Rock Hotel. They’re luring more visitors than ever with competitive rates, water parks and complimentary transportation to area theme parks. Off-site may also turn out to be more affordable, especially if the family has a car.

One caveat to staying off-site: You’ll only be able to book FastPasses 30 days out from the start of your trip.

Know about the military discounts

If you’re military, you have earned the right to save on your Disney trip! ShadesofGreen.org is a special program offered for military personnel and families in partnership with Disney. Discounted lodging generally starts at $95 a night. Other discounts on park admission, dining and transportation are available too.

Use the free FastPass+ option

FastPass+ enables guests to reserve a spot in line at favorite rides prior to their trip. Once guests receive their theme park tickets, they can log into My Disney Experience on the Disney website or app and make an itinerary of preferred rides and attractions. This feature allows families guaranteed access and short wait times to some of the hottest attractions. Visitors who master FastPass+ can minimize the wait times and maximize the time they spend playing in the parks.

If you’re staying on a Disney property, you can begin lining up your FastPasses as soon as 60 days out from the start of your trip.

Have the right gear

Take ponchos from the dollar store with you for afternoon and evening thundershowers instead of buying overpriced ones at the park. Sure, they won’t have cute characters on them, but they’ll help you keep more of those other kinds of characters — like Washington, Lincoln, Hamilton, Jackson and Franklin — in your wallet!

Have the right reading material

Money expert Clark Howard has long recommended that you get “The Unofficial Guide to Walt Disney World,” not any of the official publications that come from Disney. This manual is updated yearly and tells you all kinds of money and time-saving tips that the parks don’t want you to know.

Go when it’s quiet

Even though the new dynamic demand pricing initiative won’t let you steal a deal, you’ll still want to plan your trip during a quieter time of the year if possible. You can get a sense of expected crowd sizes on sites like TouringPlans.com and WDWPrepSchool.com.

In general, fall is one of the best times for Florida vacations each year. Disney World offers discounts to Florida residents that fill the parks with daytrippers at that time of year. That creates some traffic, but not as much as you would have encountered over the summer. The real time to book, though, is during the first two weeks of December. Almost nobody goes on vacation at that time.

Use an app to plan your time in the park

A lot of families planning trips to the House of Mouse find it easy to coordinate all their planning in one app. TouringPlans is one great option, as is Trello. Give them a try!

Easiest way to schedule your kids’ free time this summer

Other stories you might like from Clark Howard:

Related

34 retailers likely to close or go broke before the end of 2017

Published: Sunday, May 28, 2017 @ 1:03 PM

Via @tvnewzguy / Twitter
Via @tvnewzguy / Twitter

The bloodbath at retail that’s seen more than 3,600 stores closures announced since January isn’t over yet.

We could reach the 10,000 store-closure mark by the end of the year, according to credit consulting service F&D Reports.

Read more: 2017 retail closings — What you need to know

Which retailers are next to fall?

F&D’s research has identified 34 retailers suffering from poor sales and too much overhead that it says will likely announces more store closures en masse or bankruptcy filings before the year is out.

  • Shopko
  • National Stores
  • Forever 21
  • Charming Charlie
  • Fresh Market
  • Bloomin’ Brands
  • Ascena
  • Tailored Brands
  • Rent-A-Center
  • Bravo Brio
  • Trans World
  • Fred’s
  • Rite-Aid
  • Conn’s
  • Tuesday Morning
  • Guitar Center
  • GNC
  • Neiman Marcus
  • Toys R Us
  • Sears Hometown
  • J. Crew
  • Noodles and Co.
  • Lumber Liquidators
  • Charlotte Russe
  • Bon-Ton Stores
  • Tops Markets
  • Claire’s
  • Ruby Tuesday
  • Sears Holdings
  • 99 Cents Only
  • Ignite
  • Perfumania
  • Le Chateau
  • Gymboree

It’s not just Amazon killing the brick-and-mortar stores!

We should note that some of the stores listed here — SearsBloomin’ Brands and Ruby Tuesday, in particular — have announced anywhere from dozens to more than 150 store closures this year already.

Meanwhile, it’s been widely reported that others like Gymboree and J. Crew are facing imminent bankruptcy.

Yet in the midst of all the media coverage, one important point is sometimes overlooked: It’s not just Amazon killing off the brick-and-mortars. It’s also that we’re way “over-stored” in the United States, as money expert Clark Howard would say.

“We have far too many retail locations, shopping centers and branches of different chains,” the consumer champ notes. “But stores that are meeting your needs with low prices will continue to thrive.”

The sad truth for ailing retailers is that we have 24 square feet of retail space for every person in the United States, according to F&D.

By comparison, Canada — the next country on the list with the most retail space — has 16 sq. ft. of retail space per capita.

Australia — the third most heavily retailed country in the world — has only 11 sq. ft. That’s less than half the square footage of retail space per capita that we have!

Read more: Lidl — Aldi’s archrival — announces first store openings

Liquidation sales underway at 138 J.C. Penney locations

Other stories you might like from Clark Howard: