About 4 years ago I wrote a blog about the impending ability of debt collectors to seize federal tax refunds as a form of debt collection. It seems that the State legislatures have been moving rapidly to make that form of debt collection a reality. Here is my article from 2015:

Now it seems that South Carolina has become one of the States to allow debt collectors to seize tax refunds in order to pay outstanding medical bills. The summary of the new law can be found here:

The medical debt collected from tax refunds totaled more than $92.9 million in more than 172,000 seizures in 2017. Additionally, approximately $50 per seizure was added to each garnishment to pay the State and County responsible for collection. That equates to $540.00 average taken from each refund plus the additional $50 fees for a total of nearly $600 lost per seizure.

Medical bills are one of the leading causes of filing bankruptcy for middle and working class individuals. Between the lack of health insurance or the out of pocket expenses for any medical treatment even with insurance, it becomes impossible to pay off the medical bills if you have a health emergency.

Medical bills are fully dischargeable in any type of bankruptcy filing. However, if the medical bill is paid through the seizure of a tax refund, it is a double penalty to the consumer. First, the consumer is paying a debt that would have been dischargeable in a bankruptcy filing. Second, the consumer loses the ability to put the tax refund to future needs for their family, such as food, clothing, school costs, etc.

If you have medical bills that are outstanding, you should carefully consider whether it may be beneficial to file a bankruptcy to deal with those debts. While the tax seizure issue may only be occurring in South Carolina at this time, it is just a question of when it is going to come to the other States.

At Mickler & Mickler, we attend Court and see the bankruptcy trustees and judges in action several times a week. We have the experience to guide you to the right decision about whether to file a case, and if so, what Chapter to file.   When you contact our office, we can help you in your case with sound legal advice.

Please contact Mickler & Mickler at 904.725.0822 or We will be happy to set you up a free appointment to discuss your situation and potential solutions.

Bryan Mickler