Category: Medical Debt

  • Hospitals Suing Patients – A New Study

    Posted by

    Melissa Jacoby

    screen shot of SSRN title and author list and beginning of abstract

    My first post on the original Credit Slips was about medical billing and collection; so is this first post on the new Credit Slips. I write to encourage more of you to read Hospitals Suing Patients: The Rise of Stealth Intermediaries, posted this summer on the Social Science Research Network.  This study, by law professor Barak Richman and coauthors at Stanford University’s Clinical Excellence Research Center reports on a hospital’s recent use of collection agencies to sue and enforce judgments (many of which were based on “unsubstantiated and inaccurate billing records”) against patients, and the impact of state law efforts to increase transparency in debt collection. And herein lies the end of my first post on the new Credit Slips, if only to expedite your decision to download this study.

  • The Consumer Debt Default Judgments Act

    Posted by

    Melissa Jacoby

    MapConsumer debt has been a difficult topic for uniform state law movements, but here's one more attempt recently approved by the Uniform Law Commission and the American Bar Association, and introduced in Colorado last week.  You can access the materials here. Meanwhile, here is ULC's summary:

    Numerous studies report that default judgments are entered in more than half of all debt collection actions. The purpose of this Act is to provide consumer debtors and courts with the information necessary to evaluate debt collection actions. The Act provides consumer debtors with access to information needed to understand claims being asserted against them and identify available defenses; advises consumers of the adverse effects of failing to raise defenses or seek the voluntary settlement of claims; and makes consumers aware of assistance that may be available from legal aid organizations. The Act also seeks to provide a uniform framework in which courts can fairly, efficiently, and promptly evaluate the merits of requests for default judgments while balancing the interests of all parties and the courts.

    Would welcome Credit Slips posters and readers chiming in on this act in the comments, especially if you were involved in the drafting process and/or if will be weighing in on this act with their state legislatures.

    And for previous recent coverage of other uniform acts being urged on state legislatures, see here and here.

  • Consumer Bankruptcy, Done Correctly, To Help Struggling Americans

    Posted by

    Pamela Foohey

    Today, Senator Elizabeth Warren unveiled her new plan to reform the consumer bankruptcy system. The plan is simple, yet elegant. It is based on actual data and research (including some of my own with Consumer Bankruptcy Project co-investigators Slipster Bob Lawless, former Slipster, now Congresswoman Katie Porter, and former Slipster Debb Thorne). Most importantly, I believe it will make the consumer bankruptcy system work for American families. And, as a bonus, it will tackle the bad behavior that big banks and corporations currently engage in once people file, like trying to collect already discharged debts, and some non-bankruptcy financial issues, such as "zombie" mortgages.

    In short, the plan provides for one chapter that everyone files, combined with a menu of options to respond to each families' particular needs. It undoes some of the most detrimental amendments that came with the 2005 bankruptcy law, including the means test. In doing so, it sets new, undoubtedly more effective rules for the discharge of student loan debt, for modification of home mortgages, and for keeping cars. It also undoes "smaller" amendments that likely went unnoticed, but may have deleterious effects on people's lives. Warren's plan gets rid of the current prohibition on continuing to pay union dues, the payment of which may be critical to allowing people who file bankruptcy to keep their jobs and keep on their feet. Similarly, the plan eliminates problems debtors face paying rent during their bankruptcy cases, which can lead to eviction.

    One chapter that everyone files means that the continued racial disparities in chapter choice my co-authors and I have documented will disappear. No means test, combined with less documentation, as provided by Warren's plan, means that the most time-consuming attorney tasks will go away. Attorney's fees should decrease. Warren's plan also provides for the payment of fees over time. People will not have to put off filing for bankruptcy for years while they struggle in the "sweatbox." Costly "no money down" bankruptcy options should disappear. People will have the chance to enter the bankruptcy system in time to save what little they have, which research has shown is key to people surviving and thriving post-bankruptcy.

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  • Counting Healthcare Chapter 11 Filings: Are There More Than Expected?

    Posted by

    Pamela Foohey

    This post is co-authored with my student, Kelsey Brandes, rising 3L, IU Maurer School of Law

    Reports of hospitals, physician practices, healthcare systems, and clinics filing for bankruptcy have become seemingly increasingly well publicized in recent years. At the beginning of this year, Pew released a study detailing why rural hospitals are in greater financial jeopardy in non-medicaid expansion states in the wake of the ACA. This may foreshadow more hospital closures and possibly more bankruptcy filings. With this in mind, one of my students at Indiana University Maurer School of Law, Kelsey Brandes (with whom I'm co-posting), decided to survey healthcare businesses that had filed chapter 11 between the beginning of 2008 and the end of 2017 with the goal of assessing how many healthcare businesses filed chapter 11 and why they filed, as based on their disclosure statements and other filings.

    This survey found that, after combining jointly-administered cases, on average, 38 healthcare organizations filed per year during the study's ten year period, as shown by year on this graph.

    Healthcare Post Graph

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  • New (From the Archives) Paper on Determinants of Personal Bankruptcy

    Posted by

    Melissa Jacoby

    This working paper is a longitudinal empirical study of lower-income homeowners, including a subset of bankruptcy filers, produced with an interdisciplinary team of cross-campus colleagues, including Professor Roberto Quercia, director of UNC's Center for Community Capital. We just posted this version on SSRN for the first time yesterday in light of continued interest in its questions and findings. The abstract does not give too much detail (see the paper for that), but here it is:

    Personal Bankruptcy Decisions Before and After Bankruptcy Reform

    Abstract

    We examine the personal bankruptcy decisions of lower-income homeowners before and after the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Econometric studies suggest that personal bankruptcy is explained by financial gain rather than adverse events, but data constraints have hindered tests of the adverse events hypothesis. Using household level panel data and controlling for the financial benefit of filing, we find that stressors related to cash flow, unexpected expenses, unemployment, health insurance coverage, medical bills, and mortgage delinquencies predict bankruptcy filings a year later. At the federal level, the 2005 Bankruptcy Reform explains a decrease in filings over time in counties that experienced lower filing rates.

  • Older Americans’ Rising Bankruptcy Filings

    Posted by

    Pamela Foohey

    Older Americans (age 65 and over) are increasingly likely to file bankruptcy and now comprise a larger proportion of the people who file bankruptcy — and the effects are not small. Using data from the Consumer Bankruptcy Project, in a new working paper just posted to SSRN — Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society — my co-authors (past Slipster Debb Thorne, Slipster Bob Lawless, and past Slipster Katie Porter) and I find a more than two-fold increase between 1991 and now in the rate at which older Americans file bankruptcy. We further find an almost five-fold increase in the percentage of older persons in the bankruptcy system. The magnitude of growth in older Americans in bankruptcy is so large that the broader trend of an aging U.S. population can explain only a small portion of the effect.

    In the paper, we link older Americans’ increased filing rates with the shrinking social safety net. A story published today in the New York Times (on actual paper and on the front page!) does an exceptional job of both describing our study and detailing the ways in which the risks of aging have been off-loaded onto older Americans: “vanishing pensions, soaring medical expenses, inadequate savings.” The story also highlights the financial and life travails of a few older Americans who filed bankruptcy. Their struggles stem from declining income, lost insurance, and unmanageable medical expenses.   

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  • Bankruptcy, Illness, and Injury: More Data

    Posted by

    Melissa Jacoby

    A while back, political scientist Mirya Holman and I wrote a book chapter making sense of existing (and dueling) studies of the relationship between medical problems and bankruptcy, and presenting new findings from the 2007 Consumer Bankruptcy Project on debtors who entered into payment plans with their medical providers and fringe and informal borrowing for medical bills. Given the enduring interest in household management of out-of-pocket expenses associated with illness and injury, we recently posted an unformatted version of the chapter so it can be useful to more researchers and advocates.  Download it here.

  • John Oliver and Consumer Law YouTube Videos

    Posted by

    Dalie Jimenez

    I’m trying something new this year. My consumer bankruptcy policy seminar students will read many great articles by many wonderful academics on this blog, as well as others, but this year, their “reading” will also include a great deal of YouTube.

    90% of the videos are John Oliver segments from his excellent show on HBO, Last Week Tonight. They cover particular “products” (student loans, credit reports, debt buying, payday loans, auto loans, retirement plans and financial advisors) and middle class issues (minimum wage, wage gap, wealth gap, paid family leave).

    I thought Credit Slips readers might enjoy seeing them all in one place. Here they are in no particular order. Let me know if I’ve missed any!

  • The New Reality of Small Debt Collection

    Posted by

    Jason Kilborn

    Debt collectorsAbout 10 years ago, Rich Hynes wrote an intriguing paper on consumer debt collection, asking "where are all the garnishments?"  Today, Pro Publica's Paul Kiel is out with an answer: Nebraska and Missouri … and in the future. Kiel's story challenges the longstanding conventional wisdom that debtors are unlikely to face lawsuits and collection action for small debts. That might have been true before the mid-2000s, when Hynes wrote his paper, and in Virginia and Illinois, which Hynes studied, but it's certainly not true after the financial crisis, Kiel reports, especially in certain high-volume-low-dollar-collection-heavy states. I can hardly do justice to Kiel's revealing data collection and analysis, but here are a few highlights to whet your appetite: (1) debt buyers are among the primary drivers of this trend, not collection agencies, and their industry has consolidated and matured recently, (2) the number of lawsuits against consumers on small debts has absolutely exploded starting in about 2006, the year Hynes's article was published (again, thanks almost entirely to debt buyers, "In 1996, there were around 500 court judgments in New Jersey from suits filed by debt buyers. By 2008, that number had reached 140,000."), (3) these buyers repeatedly clean out consumer bank accounts with garnishments seizing an average of only $350, "Plaintiffs in Missouri tried to garnish debtors’ bank accounts at least 59,000 times in 2012." There's more of interest in Kiel's report–a must-read for those (like myself) who have for years downplayed the threat of enforcement of small debts. It really depends where the debtor lives and whether the debt is acquired by a buyer. 

    Debt collector image courtesy of Shutterstock

  • The “New” New Legislation on Student Loans and Bankruptcy

    Posted by

    Melissa Jacoby

    AbstractSenator Harkin's discussion draft of the Higher Education Affordability Act (described here) is expected to include a provision restoring bankruptcy relief from private for-profit student loans. A few years ago, I offered justifications for that move here. Prof. Scott Pryor agrees.

    But wait, there's more. S.2471, The Medical Bankruptcy Fairness Act of 2014, introduced by Senator Sheldon Whitehouse, co-sponsored by Senator Elizabeth Warren. Section 6 would offer relief from student loans for some bankruptcy filers. Take a look. 

    Abstract image courtesy of Shutterstock