Collection Laws

20 09 2010

A debt is defined as “a consumer’s obligation to pay money arising out of a transaction in which money, property, insurance, or services are primarily for personal, family or household purposes” (Fair Debt Collection.com).  However, when consumers need medical care, they all too often overlook the costs in lieu of their health, assuming that their insurance is fully responsible for the costs and that it is the obligation of the physician to bill their insurance (Fair Debt Collection.com).  When the latter does not occur, the debts come due.  Over 60 million dollars of those debts go unpaid in the US each year (McLaughlin).  Thus, the need for collections arises.

Whether the physician’s office is trying to collect the debt internally, or hires a collection agency to act on their behalf, there are laws that protect the debtor from harassment and other unfair collection activities (Fremgen, 192).  These laws define how much of a person’s pay can be garnished for payment of a debt, when the person can be contacted, where they can be contacted and other guidelines.

When a court finds that the debt is valid, it can order what is called a garnishment of the wages of the debtor, which obligates the debtor’s employer to withhold a specific amount of monies from their paycheck to be paid to the creditor.  Garnishment of an employee’s wages is protected by the Federal Wage Garnishment Law (Fremgen, 195).  This law prohibits an employer from discharging an employee whose wages are being garnished, and sets the standard on how much money can be taken from an employee’s check.  The federal law states that no more than 25% of an employee’s disposable income (wages earned after legally required deductions such as taxes are taken out), or no more than 30 times the current minimum wage, whichever is less (USDOL).

The Fair Debt Collection Practices Act was enacted in 1978 by the Federal Trade Commission after the congressional committee found that there was an “abundant…use of abusive, deceptive, and unfair debt collection practices by many debt collectors” (FTC, 4).  As a result, they constructed a series of guidelines in the law that details how a collector may contact a debtor, and how they cannot.  For example, a collector can call a debtor at home between 8 am and 9 pm, but they cannot communicate with the debtor by post card.

These laws are created with the consumer in mind, not to prevent or create loopholes so that their debt goes unpaid, but so that they do not endure harassment or other unethical actions in the course of that debt being collected.  They benefit the debtor, primarily, protecting their right to privacy; they also protect the collector by establishing clearly defined methods for collecting debts.

 

Works Cited

“Medical Debt Collection Rules, Advice and Information.” Fair Debt Collection Practices Act – You Can Fight Back! Web. 21 Sept. 2010. <http://www.fair-debt-collection.com/searches/medical-debts.html&gt;.

“The Fair Debt Collection Practices Act.” Federal Trade Commission. 2006. Web. 21 Sept. 2010. <http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf&gt;.

Fremgen, Ph.D., Bonnie F. Medical Law and Ethics. 3rd ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2008. Print.

McLaughlin, Ronald. “Medical Billing- Patient Collection Management.” ArticleSnatch Free Article Directory. 2009. Web. 20 Sept. 2010. <http://www.articlesnatch.com/Article/Medical-Billing–Patient-Collection-Management-/951462&gt;.

USDOL. “Elaws – Employment Law Guide A Companion to the FirstStep Employment Law Advisor.” The U.S. Department of Labor Home Page. Sept. 2009. Web. 21 Sept. 2010. <http://www.dol.gov/compliance/guide/garnish.htm&gt;.

 

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2 responses

11 12 2010
Luci Klaphake

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12 12 2010
Bella Bebout

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