Podcast #13: Medical Stay Order Against All Debts

Disclaimer

While the information given in this podcast is instructional, it is not intended to be taken as legal advice for your particular legal or financial situation. The recommendations that we give to one person may not be appropriate to your particular situation. The information contained in these podcasts is also not intended to replace the advice that you would receive from an actual consultation with a competent legal professional practicing in the area of consumer bankruptcy law.

Welcome

Welcome to morsebankruptcy.com, the podcast, I’m Todd Morse, the owner of Morse Law. On these podcast we take various bankruptcy issues and discuss them this particular issue comes from a visitor to our website who filled out a contact form where they essentially asking questions for the first time regarding whether bankruptcy is a solution or not to their personal situation.

Viewer Question

This visitor writes I have been dealing with injury and cancer and now I have several unfulfillable garnishments, judgments and need to get out from underneath this debt, it is causing more health issues.

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This is probably one of the more terrible but at the same time more hopeful situation that we do get with some regularity. The place we can actually do some real good in somebody’s life because you can’t do this type of work for long without realizing there is a very direct correlation between the stress and frustration and fatigue caused by chronic debt and people’s health.

Now that doesn’t have to be as serious or dire as this individual dealing with cancer but you know, you do this in year and year out and you meet these people when they come in the door and you see them at their hearing and then you see them later on maybe with friends or family when they are coming in and it is like meeting an entirely different human being. There is color in their face, a spring in their step. They, just like most of us, don’t realize what you are in until you are out of it and then you have a nice detracted kind of perspective to look at where you were and you get a much better, a much clearer picture, of what it was really doing to you.

It sounds like this person has a remarkable self awareness, so they are already aware just how much this type of stress affecting their health and their life in general. Now, they mention several things here that is kind of interesting. It is not uncommon that somebody does deals with a major illness or injury recovers from that only to point out they’ve got a whole other challenge now – that is dealing with the bills from whatever it was helped them recover.

Unfortunately, whether you are insured or not it doesn’t really seem to preclude you from having to file a bankruptcy at some point to deal with these types of issues. For example, my wife is an ICU nurse. She says the beds on her floor are $5000 a night and that’s without even having anything particular interesting or fancy done to you that’s just getting a decent night’s sleep in her bed. Often times if you been fortunate enough to recover from a serious illness that does requires hospital stays it is matter of months later that bills starts coming in and you realize you have one more thing you have to survive as well.

But now, this one sounds a little further than that. Different types of debts tend to sue at different intervals. For example, one of the fastest ones that I know is landlord debt. They will just take it down to county court almost immediately, certainly within a few months. In most cases we get judgments and then try to seek those judgments through garnishments of wages or bank accounts. Another quick one would be pay day loans. They are very often locally owned and locally collected on so they tend to go to judgment pretty quickly. Now what we call our more run of the mill debt, the ones we see day in day out medical and credit cards. Medical is certainly the more likely to sue quickly than credit card. Medical I have seen usually going to suit somewhere around year and year and a half. It all depends on who issued the debt, who collected on the debt, what law firm then did it get turned over to after the collection company. There are several factor that go into that make it anything but perfectly predictable.

But in general you are going to get sued a lot faster on medical debt than you would by credit card debt and it sounds like that’s where this individuals already found themselves. They have been sued. So at some point they were handed a summons and a complaint. Summons said you’re gonna have to go to a hearing in about 30 days and the complaint told them who was suing them and what they are being sued for, the amount, and maybe the person who is being sued on by a collector. You can’t really match it up successfully with the original creditor but in any event that’s already happened.

At that hearing a judgment went in and now the creditor or the plaintiff of that case has taken the judgment back to the county court and gotten the garnishment issued so what they’re going to do with that garnishment is either go after the person’s bank accounts in which case they going to be able to seize whatever money happens to be in their accounts from the date the garnishment served or they are going to go after their wages. In which case they going to get 25% of whatever the individual’s take home pay would be which might be enough to prevent them from making rent or mortgage payments, or gasoline for the car, groceries for the cupboard.

The big question is then how do you stop it or can you stop it or what do you with that at the stage of collections. Well, when a bankruptcy is filed, it really doesn’t matter what chapter a bankruptcy it is, but when a bankruptcy is filed, the first thing that the court does is they issue an automatic stay order. The stay order functions to halt or stop all collection activities. So it doesn’t matter whether the collection activities is a series of irate, annoying phone calls, whether it’s a civil suit, a judgment, a garnishments it’s already been in place maybe a check or two already been hit, as soon as the stay order goes into effect all of those collection activities are required by law to stop. If they don’t stop then they have to pay restitutions to the court and quite possibly to the individual who is being collected on.

So in this kind of situation this is one of those where if a garnishments already in place, they are losing money through bank account garnishment or through wage garnishment, they need to get in and speak to bankruptcy attorney immediately. The idea here would be to get drafted, reviewed, signed and filed as quickly as possible because there is no way to stop those type of collection activities until the case is filed and the stay order has been issued.

So, the bright side, sounds like this person recovered from the illness and now they just now need to clean up the financial mess caused by an illness as well. They can get their bankruptcy filed, whatever chapter that might be, get that stay order in place. Then they are able to enjoy the good health that it sounds like they already fought their way back to. So, good to hear that they are doing better they just need to take care of the last part of the filing and then everything ought to be in good shape. A good story about getting better and a good question as well.

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