According to CNN, 76% of Americans live paycheck to paycheck with little-to-no emergency savings account to cushion blows such as from being injured in a car accident. A car accident can wreck your credit rating, especially if your injuries are severe enough that you are hospitalized and, therefore, unable to work. With mounting medical bills and household bills, many people go from the hospital to bankruptcy court. Here are a few ways to make sure your bills are covered.
While you wait for a settlement from the insurance company of the person who caused the accident, your car insurance can pay your medical bills and the damage to your vehicle so you can get back on the road. When the settlement is reached and the other person's insurance agrees to pay your medical bills and property damage, they will reimburse your insurance company for what they paid. This is called subrogation and is common in the industry.
If you have car repair deductibles and medical copays, the at-fault driver's insurance can also repay you for covering those costs as part of the terms of subrogation. The good news about subrogation is that you don't have to do anything for it to happen except keep your insurance company informed about all correspondence between you and the at-fault driver's insurance company.
Sometimes, injured parties are asked by the at-fault driver's insurance company to sign a waiver of subrogation. Do not do this because it will prevent your insurance company from recouping their losses. Because of this, your insurance company may deny you coverage when it's time to renew your policy because preventing their ability to recoup their losses can be considered a breach in your insurance contract.
Many people find it difficult to keep up with their regular bills due to injuries from a car accident. When you are unable to pay your bills, creditors begin to call at all hours and your accounts may be sent to collection agencies. Sometimes, creditors file lawsuits for non-payment.
To avoid these problems, ask each of your creditors to file a creditor's lien. Basically, this is an agreement between you and a creditor in which you promise to pay the creditor as soon as you receive your settlement from the accident. This is a legal document, and it is filed at your local county courthouse. Therefore, you will need to hire a lawyer to send requests to your creditors and negotiate the terms with them.
Creditor's liens are paid directly from the settlement by your lawyer after he or she takes their contingency fee from the settlement. During the time in between the filing of the creditor's liens and when the settlement is received by your lawyer, your creditors will be unable to attempt to collect money from you to pay your debts. If you do receive phone calls and/or correspondence from your creditors asking you to make a payment, speak with your lawyer.
Pre-settlement funding is similar to a payday loan in that it is set up to be paid back through your settlement. These loans are also called lawsuit loans and typically have high interest rates and fees. If you choose to get pre-settlement funding, be sure to get one that is a non-recourse loan.
This means that the lender will have no recourse to seek payment from you for the loan if you do not reach a settlement or you lose the lawsuit. If you do reach a settlement or win the lawsuit, the loan is repaid directly from your settlement through your lawyer before it reaches your bank account.
Since non-recourse loans are risky for lenders, they typically will only approve this type of loan if your case is very strong. Therefore, they will likely ask to speak with your lawyer and/or the insurance companies that are involved, which means you will need to sign a disclosure form for the involved parties to be able to speak with the lender.
For more information and legal advice, talk with an auto accident attorney, such as those at Gelman Gelman Wiskow & McCarthy LLC.