Can I Collect From a Patient in Bankruptcy?

Q.  Recently a patient filed bankruptcy and listed my practice as a creditor. I nonetheless want to try to collect this balance the next time the patient comes in for an appointment or in the alternative, terminate the patient-physician relationship. Can I do this?

A.  According to TMA's Office of General Counsel, such actions may run afoul of the bankruptcy court stay, and violating a bankruptcy stay is a very serious matter. Bankruptcy courts do only one thing, bankruptcy. They therefore closely enforce the Bankruptcy Code. 

One of the main features of American bankruptcy law is the concept that a bankruptcy filing puts into place an automatic stay against creditors from collecting on the debts from which the filer seeks relief. Any action by a creditor that can be seen as a collection effort while a bankruptcy stay is in place poses legal risks. Terminating the patient-physician relationship for nonpayment may be seen as an attempt to collect on the debt. The Bankruptcy Code allows a debtor/patient to recover actual damages, including costs and attorney's fees, and punitive damages for a willful violation of the bankruptcy stay. 

Debtors can voluntarily choose to continue payment on some debts. However, to reaffirm a debt, a careful process must be followed and, again, is entirely voluntary. You may want to consider developing - with the help of your practice attorney - a policy on how to deal with patient bankruptcies. This is even more important now that new bankruptcy laws may prevent some debts from being totally discharged.

NOTICE :  This information is provided as a commentary on legal issues and is not intended to provide advice on any specific legal matter. This information should NOT be considered legal advice and receipt of it does not create an attorney-client relationship. The Office of the General Counsel of the Texas Medical Association provides this information with the express understanding that 1) no attorney-client relationship exists, 2) neither TMA nor its attorneys are engaged in providing legal advice and 3) that the information is of a general character. Although TMA has attempted to present materials that are accurate and useful, TMA shall not be liable to anyone for any inaccuracy, error or omission, regardless of cause, or for any damages resulting therefrom. You should not rely on this information when dealing with personal legal matters; rather legal advice from retained legal counsel should be sought.



Content reviewed: 3/16/2007

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Last Updated On

June 03, 2016

Originally Published On

March 23, 2010

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