Posts Tagged ‘Bankruptcy’

Do I need to pay the hospital bill?

Wednesday, December 12th, 2012

I was in court yesterday and had the opportunity to listen to a number of cases where the hospital was bringing legal action against people for non-payment of hospital bills.

One was a very sad case where a woman had died and the hospital had filed suit against her son for payment of her bill.  As I’ve discussed before, children are not normally responsible for the payment of their parent’s bills.  However, in this case, the son had signed the hospital admittance form agreeing that he would be personally responsible for the bill.

There were also a number of cases where people said that they were still in discussions with the insurance company about how much the insurance company would pay.  Again, the people had signed the admittance forms saying that they would be responsible for payment.

You can pay a hospital bill yourself, even if you have insurance and a claim has been submitted.  If  you have already paid a bill and the insurance company then sends money to the hospital, you can talk to the hospital about getting a refund.  I’ve never personally seen a case where the hospital has refused to send a refund when a bill was overpaid.

Hiding from the bill and hoping it will go away isn’t really going to help you much.  Most hospitals that I have seen will work with you on a payment plan if you can’t afford to make the entire payment all at once.  This will help eliminate the legal fees that the hospital will pass on to you if they have to go to court to get payment.

Generally, by the time the hospital brings you to court for non-payment, your account is what is commonly called ‘seriously past due’ and the normal insurance payment process has not covered the costs and it is very likely that the costs will not be covered.  If you really think that the insurance company should have paid the bill and they did not, then your fight is with the insurance company, not the hospital that provided the care.

Bottom line?  If you sign the paperwork saying that you will be responsible for the bill, then it is your obligation to pay.

If you are not able to make any sort of payment arrangements, perhaps it is time for you to talk to an attorney about bankruptcy.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

How To Pay Your Criminal Restitution Through A Chapter 13 Bankruptcy

Tuesday, March 20th, 2012

criminal restitution in chapter 13 bankruptcy

Today we have a guest post from Jay S. Fleischman, a great consumer bankruptcy attorney who is a member of the National Association of Consumer Advocates, a member of — and the New York co-chair of — the National Association of Consumer Bankruptcy Attorneys, and a partner in the New York law firm of Shaev & Fleischman, LLP

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Let’s say you’re convicted of a crime.  Your lawyer can get you jail time or criminal restitution, perhaps a mix of both.  Here’s how to handle that restitution order using the U.S. Bankruptcy Code.

Bankruptcy is usually thought of as a way to get out of credit card debt, stop foreclosure, and the like.  And though you can’t wipe out a criminal restitution order using the bankruptcy laws, you can leverage the system to repay that debt in a way that doesn’t interfere with your ability to earn a living.

Discharge of Criminal Restitution In Bankruptcy

Under 11 USC 523(a)(7), you cannot discharge a debt that is for a “fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty”.  In other words, you can’t wipe out your criminal restitution obligation in bankruptcy.  When you file for Chapter 7, which is designed to lead to a discharge of your obligations, you will still owe the criminal restitution when you complete your case.

Chapter 13 Bankruptcy As Repayment Tool

There is, however, a different type of bankruptcy case that is available to those who have regular monthly income.  Under Chapter 13 bankruptcy you can repay a portion or all of your debts over a 3-5 year period.  The amount you are required to pay each month under Chapter 13 is dictated by a combination of your income, expenses and debt, and the monthly payments go to a bankruptcy trustee for distribution to your creditors according to a legally-mandated formula.

Chapter 13 is an elegant way of reorganizing your financial life and structuring repayment in such a way as to minimize the impact on your day-to-day life.  While you’re in an active Chapter 13 case the government cannot execute against your income or assets in connection with the restitution award, so you won’t need to worry about your paycheck or bank account being seized during this period of time.

If you’re in a Chapter 13 bankruptcy, however, you’re going to need to repay that restitution award in full because, as in Chapter 7, the claim won’t be discharged at the end of the case.  That’s why it’s important to structure your Plan accordingly.

Order Of Repayment In Chapter 13

Debts get paid in a particular order under the U.S. Bankruptcy Code.  The U.S. Bankruptcy code has at its core the policy of fairness to all creditors of equal legal priority.  At the lowest priority of repayment stands the general unsecured claim, which includes credit cards and medical bills.  § 507(a) of the U.S. Bankruptcy Code lists those debts that are entitled to priority over other unsecured debts. Although the list of priority claims includes certain type of debts that would also be nondischargeable, criminal restitution claims are not among those listed.  In addition, the bankruptcy court can’t change the priority scheme established by the Bankruptcy Code.
If you file for Chapter 13, your repayment plan can’t attempt to repay your criminal restitution award before other general unsecured creditors except in extremely limited situations.  In fact, the reported cases addressing separate classification of restitution claims have uniformly denied confirmation. See, e.g., In re Crawford, 324 F.3d 539 (7th Cir. 2003)In re Bowles, 48 B.R. 502 (Bankr. E.D. Va. 1985)In re Williams, 231 B.R. 280 (Bankr. S.D. Ohio 1999)In re Limbaugh, 194 B.R. 488 (Bankr. D. Or. 1996).

The Ever-Lasting Chapter 13 Bankruptcy

If you owe money for criminal restitution, but you’re not going to be able to repay it during the course of a single Chapter 13 bankruptcy case, you may want to consider whether it makes sense to file one case, go through the entire repayment plan, and then file another one as soon as the first one is completed.  This gives you the opportunity to restructure your finances over a longer period of time than would otherwise be possible in a single bankruptcy case.
There are going to be considerations once you complete your first repayment plan, such as whether your income is higher or lower than it was when you began your case.  The second repayment plan will need to reflect your new income and expense levels, but for some it’s a valuable tool to help wrangle that restitution award into shape.

Jay S. Fleischman is a lawyer who helps people file Chapter 13 bankruptcy.  He also sues harassing bill collectors on behalf of his clients.

Image credit:  stevendepolo

Who pays the debts when someone dies?

Monday, February 13th, 2012

This has come up twice in the past week.

In one instance someone asked me if they could file an ‘estate bankruptcy’ because the person who died had a lot of debt and there was not enough money to pay all of the outstanding bills.  In another instance someone said that they knew that the children were responsible for their parent’s bills when they died.

Bankruptcy is only available for living beings or businesses.  An estate can’t file for Bankruptcy.  If there isn’t enough money to  pay all of the debts, the estate is just considered ‘insolvent’.

If you are the executor or administrator of an insolvent estate, you are not automatically personally responsible for the payment of all of the debts, but you should make sure that you know the order in which to pay any of the debts because if you pay them in the wrong order you might be held personally responsible for the wrongful payment amount.

If you are not the executor or administrator of the insolvent estate, and you haven’t signed something saying that you have accepted responsibility for a parent’s debt, it is not your debt and you do not have to pay.  Remember this when someone puts a paper in front of you to sign that you will accept responsibility to pay.

In fact, if you are not the executor or administrator of an estate, you don’t need to do anything at all.

You are not automatically responsible for your parent’s outstanding debts when they die just because you are the child.

Of course, if there are any assets in the estate, those assets should be used first to pay any bills and the heirs will only receive what is left.  If there isn’t enough to pay all of the debt, there won’t be any left for the heirs.

So what happens to that unpaid debt?  It just doesn’t get paid at all.  It is usually just ‘charged off’ by the debtor as uncollectible.

If you are worried that you might have to pay someone else’s debts after they have died, you might want to consider talking to a probate attorney or the official who handles probate matters where the person died.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.