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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.

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Downtown Dayton office building/Table 33 home sells for $2.8M

Published: Tuesday, May 01, 2018 @ 2:08 PM

Dayton city garage maintenance worker Kevin Price points upward at the 130 W Second St./ 1st National Plaza in downtown Dayton in this 2001 photo. FILE
Dayton city garage maintenance worker Kevin Price points upward at the 130 W Second St./ 1st National Plaza in downtown Dayton in this 2001 photo. FILE

A downtown Dayton office building near the federal building sold for just over $2.8 million today, according to local property records.

Titan Loan Investment Fund L.P. is identified as both the buyer and the seller for the May 1 transaction at 130 W. Second St. in downtown Dayton, according to Montgomery County property records.

The transaction is a sale to an investor named Brian Lash, a new owner coming into the market for this building, said Katie Doup, a Columbus-area spokeswoman with  real estate firm CBRE. She said a fuller press release was being prepared now on Lash’s investment in Dayton and his plans. 

 MOREMaker of Gibson guitars declares bankruptcy

Doup also said a second announcement on the sale of another Dayton building may be forthcoming in the near future. 

The 22-story building at 130 W. Second was on sale with an asking price of $4.25 million, according to a LoopNet real estate listing. It offered a rentable building area of just over 326,000 square feet and was built in 1972.

Acadia, the Table 33 restaurant, IT firm DataYard and County Corp. are some of the building’s most notable tenants. 

Acadia moved to the building last year from Kettering. The company moved to 4,800-square-feet of offices in that building.

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6 tax mistakes procrastinators make and how to avoid them

Published: Thursday, April 05, 2018 @ 11:46 PM
Updated: Thursday, April 05, 2018 @ 11:46 PM

What Happens If You Don’t Pay Your Taxes

We get it. Doing your taxes is no fun, especially if you know you’re going to owe money. But as with any project on which you procrastinate, leaving everything to the last minute can lead to errors, both large and small, and some of those errors could cost you serious money.

If you’ve gone and done it, though, and are still looking at that pile of tax forms over there in the corner, we’ve compiled a list of six quick-and-dirty tips that could keep you from making some obvious, and not-so-obvious, mistakes when you finally sit down and tackle the task. They could also help you maximize your tax refund.

1. You Forgot to Sign It

You might wonder how anyone could forget to sign their tax form, but this simple process is one of the most common tax mistakes, according to the IRS. Just like forgetting to sign a check or a contract, it means your return isn’t valid. Usually, there isn’t a penalty or interest associated with this error (since you’ve already included a check or electronic payment if you owed), so the IRS will just send a notice asking for a valid signature, but it will delay the processing of your return. If you’re getting a refund, that too will be delayed.

So check, double-check — heck, triple-check — that you signed or completed the e-signature process before filing your return. Also, check out these last-minute filing tips from the IRS.

2. You Miscarried the 9

Math errors are also a very common mistake made by folks in a hurry. Fortunately for most people, the IRS corrects any miscalculations, so there’s no need for filing an amended return. But these mistakes can mean the difference between you thinking you’re getting a refund and the reality that you actually owe taxes, so be sure to check your calculations carefully.

One way to help you avoid math errors is to file electronically so the calculations are done for you. Bye-bye, No. 2 pencil! So long, calculator!

3. You Didn’t Account for All Your Income

Did you have a side hustle early last year? A freelance design gig for a friend’s business? If so, you’re going to need to account for it, regardless of whether you received a W-2 or 1099 from whomever paid you. That’s because, while there’s an IRS threshold for filing these documents by employers, there’s no similar threshold for claiming the income. Income is income is income. If you made money and don’t report it — and the IRS catches it — it’s going to cost you penalties and interest at best, and open you to a possible audit at worst.

4. You Forgot Deductions or Tax Credit

It’s easy to forget these things when you’re in a hurry, but they can end up saving you some serious money and are well worth the extra time to figure out if you qualify. So if you’re just claiming the standard deductions because you’re under the gun, you might want to take a deep breath and check out TurboTax’s list of 10 commonly overlooked tax deductions that can keep you from overpaying the tax man.

5. You Filed for an Extension but Didn’t Understand the Rules

Filing for an extension is a great idea if you’re down to the wire and don’t really understand your tax situation. But remember that an extension gives you an extra six months to file your paperwork, but not an extra six months to pay any taxes due. So, if you’re confused, tax pros recommend doing a quick calculation of your taxes, filing for your extension and making any required payment of taxes you think you owe. This will help you avoid penalties and interest once you get your final calculations together.

6. You Didn’t Bother to Request an Extension

You gave up. You shoved, slammed and jammed your return through and now it’s full of mistakes that are going to cost you money by way of penalties or because you’ve left money on the table. It’s a much better idea to file the extension, then get the help you need from a tax professional to ensure you’re not overpaying your taxes.

Whatever you do, make sure you file your taxes. Unpaid taxes can have serious consequences on your personal finances, including your credit scores if they go unpaid long enough.

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11 ways to reduce next year’s tax bill

Published: Thursday, April 05, 2018 @ 11:55 PM
Updated: Thursday, April 05, 2018 @ 11:55 PM

SAN FRANCISCO, CA - APRIL 14:  Liberty Tax Service tax preparer Ronn Seely works on tax returns on April 14, 2011 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images
SAN FRANCISCO, CA - APRIL 14: Liberty Tax Service tax preparer Ronn Seely works on tax returns on April 14, 2011 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)(Justin Sullivan/Getty Images)

If you claimed the right number of dependents and standard deductions on your 2017 federal income tax return and you still ended up owing the IRS, you’re probably looking to avoid a repeat performance next year. Luckily, there are several ways to increase your chance for a refund (or at least reduce the amount you’ll owe) and you don’t have to be a tax whiz or accountant to take advantage.

Here are 11 ways you can pay less in federal taxes for your income return next year.

1. Contribute to a 401K or IRA

Contributing to a retirement fund is an important way to ensure financial independence in your golden years, but it can also convey short-term tax benefits. In most cases, the contributions you make to your 401K and IRA plans are tax-deductible and are not included in your taxable income at the end of the year. (Note: If you didn’t contribute to an IRA in 2017, you still have time. You have until April 17 to contribute up to the maximum amount and shave off a good chunk of your tax bill. Filed your taxes already? That’s OK. You can file an amended return to reflect the contribution.)

2. Buy a Home

There’s a distinct tax benefit to home ownership. The interest you pay on your mortgage is tax-deductible, and the interest is front-loaded. For the first several years, most of your mortgage payment goes toward interest, which will drastically reduce your adjusted gross income at tax time. Want an extra boost for your taxes next year? Consider paying January 2019’s mortgage payment in December to get a tax benefit before the end of the year.

3. Donate to Charity or Volunteer

You probably know charitable donations can be itemized and deducted from your income, so you’ll want to save receipts anytime you donate cash or items to charity. You can even deduct miles you travel for volunteering or other charity work.

“Miles you travel on behalf of a charity are deductible at 14 cents per mile for 2018,” said Gail Rosen, CPA.

4. Start a Home Business

Starting a home business can provide you with a new source of income and allow you to take deductions off any income the business generates.

These deductions include business costs you incur throughout the year, a portion of your mortgage and utilities if you use a home office and the cost of goods needed to keep your business running. You can even deduct startup costs.

“Any expenses that are incurred before the first sale are ‘start-up costs,’” Rosen said. “These costs cannot be deducted until the first sale. Then they are deducted over 15 years and you can deduct the first $5,000 in the first year.”

5. Search for a New Job

If you hunt for a new job in your field this year, you can write off some qualifying expenses as you search. There are exceptions, but potential write-offs include things like clothes or travel.

“If you looked for a new job in 2018, you should be aware of the income tax deduction that may be available with respect to job-search costs,” Rosen said. “Qualifying expenses are deductible even if they do not result in a new job being offered or accepted.”

6. Open a Flexible Spending Plan

Many employers offer flexible spending plans that let you contribute toward yearly medical expenses pre-tax. These contributions typically don’t count toward your taxable income.

7. Deduct Medical or Dental Expenses

Many medical and dental expenses are tax-deductible. According to Rosen, the cost of getting to and from medical treatment is deductible at 17 cents per mile, plus the cost of tolls and parking, and dependent expenses are also deductible.

“If you cover the medical cost of dependents, these can be deducted. Additionally, if you are covering the costs of an individual who would qualify as your dependent except that they have too much gross income — for example, an elderly parent — you may be able to deduct these costs as well,” said Rosen.

8. Education-Related Expenses

Current and former students have many eligible deductions and credits related to their education expenses. Paid student loan interest and tuition and fees can be claimed as deductions. Eligible current students can also access the American Opportunity Credit, which can cover up to $2,500 annually for four years, and the Lifetime Learning Credit, which can cover up to $2,000 per tax return.

9. Install Solar Energy

Homeowners who install solar energy systems in their home can get back tax credits at up to 30% of the cost of installation. This credit will begin to decrease after 2019 so you may want to act soon if you’re planning on installing solar panels.

As an added bonus, solar energy can significantly reduce your energy bills.

10. Hunt Down Every Available Tax Credit

We’ve named several tax credits above, but there are more, including credits for adopting children, the cost of child care and low-income households. Tax credits are more valuable than deductions, as they reduce your taxable income on a dollar-for-dollar basis, so make sure you’re taking advantage of every option.

11. Get a Pro to Do Your Taxes

No matter how much research you do, a professional may be able to identify tax deductions and credits that hadn’t occurred to you. Paying a reputable professional you trust can help you stay organized and minimize your tax liability. Here’s a handy guide to finding the right tax professional for your needs.

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5 surefire ways to retire earlier than you thought

Published: Monday, October 23, 2017 @ 11:27 AM

The following are five surefire ways to get to retirement quicker Set clear goals for yourself and track your progress Working hard and being disciplined is the most reliable ways to retire early Streamline your spending and scale back on luxuries Cut your housing expenses Put your money to work - wisely

Retirement can seem like a difficult goal to reach, so the thought of achieving it early may seem downright impossible.

But getting to retirement quicker doesn't require genius-level investing knowledge or extreme deprivation. With a plan, hard work and discipline, you may be able to get there sooner rather than later.

RELATED: House hunters, here are 5 secrets to getting the best home loans

The following are five surefire ways to get to retirement quicker:

Set clear goals for yourself

Consumer adviser Clark Howard recently shared advice from Chris Reining, who decided in his late 20s that he wanted to retire early. By the time he turned 37, he was able to reach this goal.

Howard said he thought setting clear goals was one of the most important things that Reining did. He labeled his investment account "Retire early" so he could see the words every day. In addition, Reining tracked his progress by using a spreadsheet you can get on his website. He wanted to save up 25 times his annual expenses before retiring.

(Getty Images/iStockphoto)

Work hard

The Forbes Finance Council recommends working hard and being disciplined as the most reliable ways to retire early.

This can be achieved through a high-paying job combined with saving as much of your income as possible. Another path is starting your own business.

Reduce spending

Forbes quotes a blogger who retired early and says that streamlining your spending is an important step toward achieving this goal. It's not glamorous or complicated, but it works.

He suggests scaling back on luxuries and investing your savings in a low-cost index fund. When you accumulate 25 to 30 times your annual spending in this type of account, you can quit working for the rest of your life.

This Wednesday, Sept. 6, 2017, photo shows a new home for sale in a housing development in Raeford, N.C. On Thursday, Sept. 21, 2017, Freddie Mac reports on the week’s average U.S. mortgage rates.

Cut your housing expenses

If you're like most people, your home is your biggest expense, so it's also your biggest opportunity to save, according to Money.

Housing costs take up about a third of the average budget, so Money recommends not taking out the biggest mortgage you can get. Live in a more modest-sized home when possible, and in some cases, homeowners can purchase a two-family home, living in one side and renting out the other.

Put your money to work - wisely

CNBC talked to Scott Alan Turner, who had more than $70,000 in debt at age 25, yet managed to turn things around and retire by age 44.

He put his money to work and although he made some mistakes in the beginning, he evolved into what he calls a boring investor. His savings are automatically funneled into low-cost index funds, which Warren Buffet calls a surefire way to build wealth.

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