Doctor bills are usually treated as unsecured debt your bankruptcy case, unless they are the subject of a pending or anticipated personal injury claim, in which case they could be treated as secured if the health care provider has a lien. The importance of characterizing a doctor bill as secured versus unsecured debt relates to how the doctor bill will be treated when you file bankruptcy San Diego. Secured debts must generally be paid or else you will have to give up the collateral and let the secured creditor liquidate the collateral to pay off your debt. Unsecured debts are usually discharged (eliminated) in bankruptcy, with the exception of certain nondischargeable debts such as student loans, recent taxes, and debts incurred through fraudulent circumstances.
When most people think of a secured debt, they think of a home loan or a car loan. These are, by far, the most common types of secured debts. But there are other, much less common types of secured debts. One such debt would be a doctor bill that is secured against your right to recovery in a personal injury case. So how does a doctor’s bill become secured in a personal injury case?
In personal injury cases, an injured patient who does not have medical insurance, will often be referred by his or her personal injury attorney to a doctor who will treat them on a lien basis. This means that the doctor will agree to treat the patient now and be paid later. When a doctor treats you on a lien basis, you grant the doctor a lien against your right to monetary recovery in your personal injury case. That way, the doctor is assured that he or she will be paid out of any recovery that you obtain in your case.
A doctor’s lien works very similarly to a lien that you give your automobile lender to hold against your car or the lien that you give your mortgage lender against your home. When you buy a car, you sign documents giving the lender a lien in the vehicle and the lender files the lien with the DMV. When you take out a home loan, you give your lender a deed of trust against your home and your lender records the deed of trust with the county recorder to perfect and give notice of its lien. Similarly, when you receive medical services on a lien basis, you grant the doctor a lien and the doctor serves the lien on appropriate parties (to give them notice) and files a lien in any pending personal injury case to perfect its lien.
If you file bankruptcy while you have an active personal injury claim and a doctor has a lien against your right to recover in your personal injury case, the doctor’s lien would be secured against your asset (the personal injury claim) and would be classified as a secured debt. Your debt to the doctor may be discharged, but the doctor would still retain his or her lien. This is very similar to how when you file bankruptcy, your debt to a car lender or a home mortgage lender is wiped out but the car lender or home mortgage lender still retains its lien. Be sure to consult with an experienced personal injury lawyer and also with your bankruptcy attorney if you have a personal injury claim. Both should be in communication to ensure that your bankruptcy lists your debt properly, to ensure that your case goes smoothly. If you need the name of a good personal injury lawyer, call our office at 619-501-9711 and we will help you find a reputable and experienced attorney.
If your medical bill was not incurred in connection with services performed on a lien basis, then it is most likely an unsecured debt and will be treated just like credit card debt in your bankruptcy, meaning that it will be eliminated absent fraud. Fraud is rarely a factor when dealing with medical bills, since people generally do not plan to incur medical bills. However, if you went in for cosmetic surgery and then filed bankruptcy the next day (or very soon thereafter) without paying any of your bill, that could raise an inference of fraud in that you never had the intention to pay the doctor’s bill at the time that you went in for the cosmetic surgery.