Search

Finding the Right Legal Representation for Your Company

How To Keep A Car Accident From Wrecking Your Credit

2 December 2015

Tracy Roberts

Being involved in a car accident can send your credit rating in a tailspin if you aren't careful. With mounting medical treatments and the loss of income from not being able to work, it can be difficult to keep up with paying your medical bills. Even though you may be awarded compensation for your damages, injuries, and pain and suffering, it can take some time before your compensation hits your bank.

Fortunately, there are a few things you can do to protect your credit rating while you wait for compensation from a car accident insurance claim and/or personal injury lawsuit. Here's what you need to know. 

Subrogation 

Even though your medical bills should be paid for by the person who caused the car accident, you can submit the medical bills that resulted from the accident to your health insurance company. They, in turn, can place a lien on the settlement to compensate them for making payments on your medical bills. The ability to do this is called subrogation, which is the legal right for an insurance provider to pursue recovery of payment from a third party. 

However, you may still be required to pay co-payments and other deductibles that are normally paid. Keep records of these out-of-pocket payments as they should also be compensated for with the settlement. 

You will need to inform your health insurance provider that your injuries resulted from a car accident. It's a good idea to have your lawyer submit a letter stating this fact, with all the necessary details, to your health insurance company. 

Creditor's Lien 

Alternatively, you can ask your medical care providers to place a creditor's lien against the settlement. This is, essentially, a promise that they will be paid by the settlement when your lawyer receives it before the settlement is distributed to you. A creditor's lien is a legal document and, therefore, needs to be filed in the local county courthouse. 

With a creditor's lien, your medical care providers will not send you bills, which can ease your financial burden while you recover from your injuries. They will, however, send bills to your lawyer. After you've received your settlement, check to make sure the status of the creditor's lien changes to "closed". You can do this by visiting the civil records at the courthouse or by visiting their online records docket, if they have one. This is important because any "open" liens can negatively affect your credit score. For more about this topic, talk to your insurance company or an attorney. 

Share