Debt Collection, Garnishment, Repossession

questions & answers

Question: I owe a debt to a creditor for medical expenses. The creditor has increased the debt by charging me a penalty for not paying on time. Is this legal? Are all late fees penalties?

Answer: Clinics generally may charge interest on an unpaid balance for medical services of more than $10. This is termed a delinquency fee. Notice must be given that a delinquency fee will be imposed if the medical charges occurred after December 31, 2000. Notice can be given in two ways:
1. When a new patient comes to his or her first appointment and is asked to sign a number of forms, one of the forms will be an agreement to pay, and include interest charges on an unpaid or delinquent balance. By signing this form, the new patient agrees to be held personally responsible for payment and agrees to the payment terms as described; and
2. If the medical office previously did not charge interest, then after ten days notice, it may start collecting a delinquency fee on an unpaid balance.

Approaches to Medical Debt:
Medical bills can consume a large share of a senior’s income. There are various ways to approach medical debt if it has not yet been turned over to a collection agency.

1. Negotiation - It is sometimes possible to negotiate with the medical providers to have the bills reduced. Providers may actually charge uninsured people much more than they charge insured people because of the way insurance payments are structured. If the medical provider uses this type of pricing practice, it may be possible to negotiate a discount or a payment plan. You may also be able to negotiate a monthly payment plan at a low interest rate. If the senior has some type of coverage, there are appeals processes under the various plans, including Medicare and Medicaid that may be helpful in disputing a bill or coming up with a payment plan, if the bill is correct. Usually, these appeal processes have very strict deadlines.

2. Other Ways to Pay the Bills - There may be assistance programs to help from the government or private sources, such as
Medicaid, Medicare programs, Pharmacy Assistance Programs, and Charity Programs. Some state governments offer affordable medicine programs for seniors, people who are disabled and people who have low incomes. Community health centers, Area Agencies on Aging, free health clinics and other community programs may also offer help. To use these services, you may need to show that you don't qualify for private health insurance or that you don't make enough money to pay for your medicine. For information on Arizona’s medical assistance, visit the Arizona Department of Economic Security Division of Benefits and Medical Eligibility online.

There are a few social agencies, such as the Salvation Army, and some private hospitals offer financial help for people who can't afford prescription medicines. Visit Resources for Seniors on this website for more information.
Patient-assistance programs (PAP) are sponsored by companies that make prescription medicines. Each company has its own rules about who qualifies for its PAP. In many cases, the senior will need to show that he or she doesn't qualify for private or public health insurance (such as Medicare or Medicaid). Proof of income may also be required to show that the senior’s income is below a certain level. Each PAP has its own application process. In many cases, the doctor, nurse or social worker will need to apply on the senior’s behalf. It's important to keep in mind that applying doesn't guarantee that the senior will get medicines for free or for a lower price. Ask your health care provider.

The following Web sites can help the senior and his or her doctor find out more about assistance programs and eligibility: - This Web site gives information about PAPs. The site also lists drugs that are available through PAPs and gives contact information for the companies that make them. In many cases, the application can be downloaded on the internet. The NeedyMeds site also links to state Medicaid Web sites. - This site is supported by the Pharmaceutical Research and Manufacturers of America (also called PhRMA). Using the tools on the RxHope site, doctors can apply for their patients to receive free or low-cost drugs from the companies that make them. This Web site is sponsored by an organization called Volunteers in Health Care. By searching the database on this Web site, doctors, nurses or social workers can find out which PAPs a patient might qualify for. The site also gives information about other resources, such as drug discount programs.

3. Which bills need to be paid first?
A senior who owes large amounts on a medical bill must look at his or her overall financial picture. Medical bills are unsecured debt and should not take priority over secured debt or necessary expenses such as food and utilities. Even if a senior is being harassed by a collection agency, it is not necessarily a good idea to convert the medical bills to a secured debt, by taking out a second mortgage, for instance, to pay off the medical bills. In this case, the senior’s ownership of the house will now be at risk if the bills are not paid. When collection calls become too much, you have the right to send the collection agency a letter stating that they must cease contacting you.

4. Bankruptcy
In recent years the bankruptcy laws have been tightened considerably, which is not good for people who cannot pay their bills due to high medical expenses. Bankruptcy is still an option though the terms of resolution are not as favorable as they once were. It is
important to speak with an attorney who works in the area of bankruptcy if this is option is being considered. To locate a bankruptcy attorney, you can visit the State Bar of Arizona online.

For more general information on consumer law topics relating to seniors, visit The National Consumer Law Center online.


  • I owe a debt to a creditor for medical expenses. The creditor has increased the debt by charging me a penalty for not paying on time. Is this legal? Are all late fees penalties?




  • Please select your county of residence below.



  • State Bar of Arizona
  • Maricopa County Bar
    Referral number 602-257-4434
  • Pima County Bar
    Referral number 520-623-4625
  • National Domestic Violence Hotline
  • Bankruptcy Court Self Help Center
  • Certified Legal Document Preparer Program


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