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The Perfect Storm: Financial Chaos

Tuesday, August 8, 2017

Imagine your income stops, and at the same time you are racking up thousands of dollars in medical bills.  Though it seems like a horrible nightmare, for many who are the victims of car wrecks or other accidents this is a reality.  How do you survive financially when faced with the financial equivalent of the Perfect Storm?  Unfortunately, there are no easy answers since settling your case can take months or even years.  However, you do have options in the meantime.

Payment Plans

One of the greatest challenges you may face after your accident are the medical bills.  Even if you have health insurance, co-payments alone for surgeries, physical therapy, hospitalizations, medication and more can be huge.  For those without access to health insurance, the costs may be far worse.  If you cannot pay, you will be unable to get the treatment you need to fully recover.  Fortunately, many medical care providers are willing to work out payment plans if you simply ask.  In some cases, you may be eligible for forgiveness of medical bills, or financial assistance in the form of Medicaid.  Your attorney may be able to recommend treatment providers who are willing to treat you with the expectation of getting paid when you settle your claim.

Financial Assistance

Another option is to borrow money with the idea of paying it back when the case settles.  Your lawyer cannot loan you money due to ethics rules, but there are other sources of funds.  A home equity loan or even an unsecured loan is often the best option, though these may be impossible to obtain if you are unable to work due to your injuries or have bad credit.  Another choice is borrowing from friends or relatives, though this is not available to everyone.  There are also loan companies which specialize in lending money with an understanding they will only be paid back if you receive a settlement.  However, this source should be a last resort since this type of company nearly always charges interest rates that are in the stratosphere.

Bankruptcy

When all else fails, filing bankruptcy may be necessary.  A bankruptcy petition creates an “automatic stay,” which prevents your creditors from attempting to collect on your debt except through the bankruptcy court.  Ultimately, some debts may be discharged through this process, meaning you do not have to pay them back.  However, bankruptcy will negatively affect your credit for years to come and may require selling many of your assets.  In addition, discharge of your medical bills will likely prevent you from recovering for those bills as part of your personal injury claim.  There are other technical effects of bankruptcy which can endanger your personal injury claim, so you need to consult with your personal injury attorney before filing to ensure this does not occur.

Financial stress is just one of the many ways that an injury can change your life and make it more difficult.  Hiring an attorney early in the process, can help minimize the difficulties you face.

Frank A. Wright, Jr., Esquire