Medical Guarantor
If I do not pay my medical bills, can the doctor or hospital sue my spouse and garnish wages?
I have had several surgeries and recently lost my job in February 2010. I have several medical conditions that make it unable for me to hold down a job. We have received several small claims judgments against us for medical bills, 95% which are mine. My spouse holds our policy through work, so they add my spouse's name to the judgments. Can I file separately for bankruptcy without them going after my spouse for the bills?
There are two key issues spouses need to focus on when it comes to liability for medical debt. The first is a contractual issue — did the non-patient spouse sign a contract that includes guarantor language? The second issue is the states laws where the spouses reside.
Contractual Liability
A guarantor is a person who promises to pay the service provider if the patient cannot or will not. If the non-patient spouse signed a contract to be a guarantor, which is usually included in hospital admission forms, then that spouse promised to pay for the services. If the non-patient spouse never signed a guarantor contract, then he or she has no contractual obligation to pay the debt. However, the spouse may still be obligated to pay the debt, albeit under a different legal theory.
Quick Tip
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Liability Under State Law
The second key issue to focus on is the laws of the states where the spouses reside. Let us assume for the sake of argument that both spouses reside in the community property states. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin.
If the spouses live in a community property state, or lived in one at the time the consumer debt occurred, the non-patient spouse may have incurred liability without signing any contract. The reasoning is that if a debt incurred during a marriage was used for the support of a spouse, liability may accrue to the non-signing spouse. Does this mean that the non-patient spouse has liability for the patient's debt in community property states? Maybe. Some creditors will not pursue legal action against the spouse because it is difficult to do so and are unwilling to expend the resources. Other creditors will take the time and expense. Each creditor has different policies, and therefore each case is different.
What about spousal liability in non-community property states? The rule in non-community property states is much simpler -- there is no liability for a spouse’s debts under state law. However, if the non-patient spouse signed a guarantor contract the contract trumps state law.
A tricky question is raised when one spouse resides in a community property state and the other resides in a non-community property state. Answering this question is very fact-dependent, and can only be answered on a case-by-case basis.
One additional thought: Creditor customer service representatives will try to convince a spouse that he or she has liability for a debt. Do not believe legal advice from anyone trying to collect money from you unless they are your attorney. Legal advice from collection agents is usually incomplete or wrong, and is always self-serving.
Judgment and Liability
A judgment occurs after a civil trial has ruled in favor of one party. A court, following appropriate state laws, will grant a judgment that allows the victor to apply the remedies allowed by that state’s laws.
Here, it appears that a creditor sued you for breach of contract, won, and now has a judgment that allows it to use your state’s remedies to collect money. Depending on your state’s laws, these remedies may include wage garnishment, levy of your financial accounts, and placing a lien on your property.
It is unclear from your message if you alone where sued, if your spouse was sued alone, or if both of you were. As explained above, your spouse may or may not have liability for your debt. If your spouse does either contractually or under your state’s law, then your spouse is subject to the judgment.
Spousal Liability in Bankruptcy
In community property states, the marital community enjoys the protection of the filing spouse's bankruptcy discharge when a spouse files bankruptcy.
In non-community property states, a Chapter 7 or 13 filing may not have any effect, positive or negative, on the non-filing spouse. The filing of one spouse does not give the other spouse protection of the "automatic stay" (blocking creditors from collection) or the bankruptcy discharge. Similarly, one spouse filing bankruptcy will not have an effect on the other spouse’s credit report, if there are no joint debts. If there are joint debts, you can expect the bankruptcy to be noted in some way on the credit record of the non-filing spouse.
In non-community property states, if both spouses are jointly liable to a creditor, the bankruptcy of one does not relieve the other of paying the debt. Upon a bankruptcy, the creditor may look to the other spouse for payment, unless the bankruptcy case is under Chapter 13. If the debt is a consumer debt to be paid 100% through the Chapter 13 plan, the co-debtor is protected by the co-debtor stay.
Recommendation
Find an attorney in your state who has experience in bankruptcy. An attorney will be able to advise you of your rights and liabilities based on your state laws and the documents signed before and during the medical procedures. I realize my answer does not provide the information you seek, but it is impossible for me to even guess what the guarantor liabilities are here without knowing more information.
I hope this information helps you Find. Learn & Save.
Best,
Bill
Did you know?
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2023 was $17.06 trillion. Auto loan debt was $1.582 trillion and credit card was $1.031 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in South Dakota, 15% have any kind of debt in collections and the median debt in collections is $2323. Medical debt is common and 3% have that in collections. The median medical debt in collections is $682.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.
