After a New Jersey mother without health insurance took her choking toddler to the emergency room, she wound up with thousands of dollars in hospital bills that she's been paying off for years and that ruined her credit. 

It's one of the horror stories that inspired Assembly members Joann Downey and Eric Houghtaling, both Democrats from Monmouth County, to propose a law that would give state residents a chance to pay off their medical debts without fear of immediately facing debt collectors.

The bill, which was introduced last month, would prohibit health care facilities from reporting an outstanding balance to a collection agency for legal action until at least 90 days after the date the patient was first provided with a bill.

Downey says the time frame is fair because it allows for patients to try and make a sincere effort to obtain the funds and pay the bill. She said that people who are recovering are not immediately thinking of paying off the bill.

Prior to referring the debt to a collection agency, the health care facility would be required to offer the patient the option to participate in an income-based repayment plan. Under the plan, the patient agrees to make affordable monthly payments that does not exceed 15 percent of the patient's discretionary income.

"At least having an amount that is reasonable that they can afford to pay, and not have to make a decision between gas money or food money or a utility bill, they can at least then be able to juggle all of these things hopefully with that figure," Downey said.

The proposed law also would discharge a debt if a patient becomes permanently disabled or dies, instead of passing it off to relatives.

If a person is temporarily disabled, the law would provide deferment until the patient is able to return to work.

Downey said the proposal is a win-win for both sides.

"Maybe the collection agencies won't be happy but I think everybody else will be happier because at least bills will start to get paid more and we'll have people who won't have their credit ruined," she said.

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