PrairieNet.Org's

Medical Debt Pamphlet

Medical (or other) debt?

Are you being sued?

Note: This pamphlet is not legal advice and is not intended to be a substitute for an attorney. This pamphlet provides consumer rights information prepared by the Champaign County Health Care Consumers. Revised 7/11/2002.

If you have low income or no income, the law can protect you from debt collectors.

Know your rights!

If you are going to court because you owe money, you may not have to pay anything if your income and property qualify as exempt. If you have a low income, or if your income is from certain sources (such as Social Security), your income and property may qualify as exempt, which means that they are protected by the law and cannot be taken by creditors. See the inside of this brochure for a list of exempt income and property.

How to protect your rights in court

The first thing you have to do to protect your rights and to have your income and property declared legally exempt (making you "judgment proof" from the debt you owe) is to go to court when you are being sued.

When you go to court, you must be careful not to waive your right to these exemptions. It is your responsibility to tell the judge if you believe your income and property are exempt! Please see the inside of the brochure for a list of exempt (protected) income and property.

If you do make a payment agreement, it is your responsibility to know what you can afford to pay.

What happens in court

When you arrive in court, an attorney for the creditor who is suing you may approach you and ask you to agree to a payment plan. This could happen either while you are waiting in the courtroom for your case to be called, or in front of the judge after your case has been called.

The purpose of the court proceeding is to determine two things:

1. do you owe the debt? 
2. must you be made to pay the debt (and if so, how much will you pay each month)?

Even if you do you owe the debt, you may not have to pay it, if your income is exempt.

If you believe that your income and property are exempt, you should tell this to the attorney and the judge, especially if you are unable to afford payments for your debt.

However, if you agree with the attorney to make payments, your promise could become a legal court order and you could go to jail if you break it (if you cannot live up to the payment agreement you make).

So, before you make any agreements or promises for payment, you should carefully consider your necessary living expenses - such as rent, utilities, food, transportation, and childcare, for example - when figuring out what you can afford. You should avoid making any agreements you can't afford to keep.

Exempt Income and Property

The following is a list of exempt (protected) income and property that can NOT be taken by creditors to pay your debts.

It is up to you to tell the judge if anything on this list applies to you. Nobody else will do it for you. If you don't bring it up, you might lose your rights under the law.

Exempt Income

Otherwise, a maximum of 15% of your total wages may be taken.

• Government benefits such as welfare, public aid, Social Security, unemployment compensation, and veteran's benefits may not be taken.
• Child support, pensions and retirement benefits, worker's compensation, personal injury awards, and life insurance policies are also exempt.

Exempt Property

• Up to $2,000 worth of property of your choice, including money in the bank, cannot be taken to pay your debts.
• One vehicle worth up to $1,200 cannot be taken.
• One house, mobile home, condominium, or other residence worth up to $7,500, or $15,000 if jointly occupied by a couple, is exempt.
• Necessary clothes for you and your dependents, health aids prescribed by a doctor, schoolbooks, family pictures, and up to $750 in tools of your trade or professional books, cannot be taken from you to pay your debts.

Exemption Checklist

Take a moment to check off and write down your exempt income from the following sources. This will make it easier to remember in court.

[ ] Weekly Job Income (After Tax):

Step 1: What is your weekly income? $_________

Step 2: Is it over $231.75 after taxes?

[ ] No. If under $231.75, then all your income is exempt. $_______________

[ ] Yes. If over $231.75, then the most of your income that can be garnished is 15% of your weekly gross pay. In other words, 85% of your weekly pay (before taxes) is exempt. $_________

[ ] TANF: $_________

[ ] General Assistance $_________

[ ] Social Security: $_________

[ ] Supplemental Security Income (SSI): $_________

[ ] Soc. Sec. Disability Insurance (SSDI): $_________

[ ] Veterans' Benefits: $_________

[ ] Workers' Compensation: $_________

[ ] Aid to the Aged, Blind, Disabled: $_________

[ ] Unemployment Compensation: $_________

[ ] Child Support and Maintenance: $_________

[ ] Alimony and Maintenance: $_________

[ ] Pension &Retirement Benefits: $_________

[ ] Life Insurance Payments: $_________

[ ] Black Lung Benefits: $_________

[ ] Legal Awards:

[ ] Crime Victim's Award: $_________

[ ] Wrongful Death Award: $_________

[ ] Personal Injury Award $_________

Remember: It is your responsibility to tell the judge if you have exempt income or property! The judge will not do it for you. If you are not sure if your income is exempt, you should tell the judge that you believe your income may be exempt.

Every person is different and can claim different exemptions.

However, here are a couple examples of what you might see in court:

Example 1

Judge: Do you agree you owe $500 to XYZ Clinic?

You: Yes, Your Honor.

Judge: Have you agreed to make any payments?

You: No, Your Honor. I cannot afford to pay this debt right now. 

Since I make less than $231.75 per week after taxes, I believe that my income is exempt.

Example 2

Judge: I will give you a moment to discuss payment terms with ABC Hospital's attorney.

You: Your Honor, I cannot agree to make any payments because I cannot afford it.

All of my income is from Social Security, and I believe it is exempt.

Get Involved Today!

If you find yourself stuck with medical bills you can't afford to pay, you are not alone. With health care and health insurance costs rising every year, medical expenses are driving more people into unmanageable debt.

The Champaign County Health Care Consumers (CCHCC) believes that all people should have access to quality affordable health care. By working together, consumers can make real reforms in the health care system. To find out how to get involved or how to get help, please contact CCHCC.

Champaign County Health Care Consumers
44 East Main Street, Suite 208 Champaign, IL 61820
Phone: (217) 352-6533
Email: cchcc@prairienet.org
Website: www.prairienet.org/cchcc 

Page URL: http://www.prairienet.org/cchcc/med-dp1.htm