COLLECTION AND BANKRUPTCY
LAWS
December 3, 2010
Idaho Healthcare Financial
Management Association
PRESENTED BY:
MIKE CHAPMAN
Chapman Law Office, PLLC
2100 Northwest Blvd, Suite 230
P.O. Box 1600
Coeur d’Alene, ID 83816
mchapman@chapmanfs.com
• This information is not intended as legal
advice and may not be used as legal advice.
It should not be used to replace the advice
of your own legal counsel.
TOPICS
• COLLECTION LAWSUITS
• BANKRUPTCY
COLLECTION LAWSUITS
• STATEMENTS AND ASSIGNMENTS
– HIPAA
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STATUTE OF LIMITATIONS
COMPLAINT/SERVICE
DEBTOR’S RESPONSE
GARNISHMENT/DEBTOR’S EXAMS
ITEMIZED STATEMENTS
• ITEMIZED STATEMENTS
– DATE(S) OF SERVICE & AMOUNT(S) OWED
– IF POSSIBLE, DEBTOR’S SIGNATURE ACCEPTING FINANCIAL
RESPONSIBILITY.
ASSIGNMENTS
• AGREEMENT THAT TRANSFERS
INTANGIBLES (I.E. ACCOUNT
RECEIVABLES) TO ANOTHER PARTY
FOR PURPOSES OF COLLECTION.
• LEGAL RIGHT TO COLLECT A DEBT.
• SUIT ON HOLD UNTIL RECEIVED
FROM CLIENT
STATUTE OF LIMITATIONS
• MAXIMUM TIME LIMIT TO FILE A
LAWSUIT
IDAHO-Oral Contract=4 Years
-Written Contract=5 Years
-Partial Payment Restarts the Statute
--Credit Reports- 7 years
COMPLAINT/SERVICE
• GENERALLY, MULTIPLE CREDITORS
AND MULTIPLE ACCOUNTS
• FILED IN COUNTY WHERE DEBTOR
RESIDES
• PERSONAL OR SUBSTITUTE SERVICE
ON DEBTOR WITHIN SIX MONTHS
DEBTOR’S RESPONSE
• DO NOTHING/DEFAULT JUDGMENT
• CALL AND PIF OR ACCEPTABLE
PAYMENT ARRANGEMENTS
• FILE ANSWER ADMITTING/DENYING
CLAIMS—(INSURANCE/MEDICAID/
MEDICARE)
• BANKRUPTCY
JUDGMENT COLLECTIONS
* A JUDGMENT IS JUST A PIECE OF PAPER
THAT SAYS YOU ARE ENTITLED TO
MONEY FROM THE DEFENDANT.
* IN MOST CASES, THE DIFFICULT PART IS
COLLECTING ON THE JUDGMENT
BECAUSE PAYMENT IS NOT VOLUNTARY.
EXECUTIONS/ATTACHMENTS
* All personal property, real property and
money is subject to execution/attachment
unless exempt by law.
1. Continuing Writ of Garnishment-Wages
2. Writ of Attachment-Bank Account
3. Judgment Lien on Real Property
Exemptions
• Don’t want Defendant living off public
funds
• Certain property exempt:
Up to $5,000.00 for household furnishings,
appliances, apparel, animals, books, musical
instruments, jewelry, guns (under $500)
* Motor Vehicle--$3,000.00
WAGES
• Continuing Garnishment until Paid in Full
• Idaho provides that a Judgment Creditor can
garnish either a) 25% of net income or b) any
amount over 30 times the federal minimum wage,
whichever is greater.
DEBTOR EXAMS
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ADDRESS
PHONE NUMBER
MARITAL STATUS
CHILDREN
CHILD SUPPORT
EMPLOYMENT
• INCOME
• MONTHLY
EXPENSES
• BANK ACCOUNTS
• TAX RETURNS
• STUDENT LOANS
• RENT/CAR
PAYMENTS
COMMON SCENARIOS
• Divorce
– Community Property
– Necessaries for Kids
– Divorce Decree
Deceased Debtors
Minors- Power to disaffirm contracts, however can’t
disaffirm contracts for necessaries if not living at home.
COMMON SCENARIOS
• Tribal Court
• Checks Marked Paid In Full
• Accepting Regular Small Payments
BANKRUPTCY
• FEDERAL STATUTES THAT RELEASE
OR “DISCHARGE”A PERSON OR
BUSINESS FROM ALL OR MOST OF
THEIR DEBTS.
PURPOSE
• GIVE THE DEBTORS A FRESH START.
• EQUAL TREATMENT OF LIKESITUATED CREDITORS.
TYPES OF BANKRUPTCY
1)CHAPTER 7-LIQUIDATION
• The debtor turns over all assets owned at the time of
bankruptcy to a trustee for liquidation. However,
the debtor is entitled to retain certain exempt assets.
TYPES OF BANKRUPTCY
2)
CHAPTER 11-REORGANIZATION
• Most often used by corporations & partnerships.
3)
CHAPTER 12-REORGANIZATION
Agricultural businesses.
TYPES OF BANKRUPTCY
4)
CHAPTER 13-REORGANIZATION
• Debtor is permitted to reorganize their personal
finances by paying accumulated debt out of their
current income over a 3-5 year period.
AUTOMATIC STAY
• When any type of bankruptcy is filed, an
automatic stay (injunction) is immediately
imposed upon all creditors. This stay
precludes the commencement or
continuation of any action against the
debtor or their property and prohibits any
action to try and collect a pre-petition debt
or to enforce a judgment lien.
NOTICE OF AUTOMATIC STAY
• Any action taken without court approval
after the bankruptcy is filed is a violation of
the automatic stay, whether or not the
creditor knew of the bankruptcy filing.
Moreover, any action taken in violation of
the stay is subject to contempt proceedings
before the bankruptcy court and the
imposition of fines, including attorney fees.
2005 BANKRUPTCY REFORM ACT
• Most substantial revision to the bankruptcy
laws in almost 30 years.
• Effective date October 17, 2005
HIGHLIGHTS
• NONPROFIT CONSUMER CREDIT
COUNSELING-MANDATORY
• MEANS TEST
• CHANGES TO AUTOMATIC STAY
RULES
• NOTICES REQUIRED TO BE GIVEN TO
CREDITORS
• MORE DOCUMENTATION REQUIRED
HIGHLIGHTS
• LONGER PERIODS BETWEEN DISCHARGE
CH 7 TO CH 7 = 8 YEARS (WAS 6 YRS)
CH 13 TO CH 7 = 6 YEARS
CH 7 TO CH 13 = 4 YEARS
CH 13 TO CH 13 = 2 YEARS
COMMON SCENARIOS
• Preferences – Why is the Trustee asking me
to give money back?
• Reaffirmation Agreements
• My Account Is Not Listed—Blanket
Discharge
• Voluntary Payments—After Bankruptcy