Unique situation with a Medical expense

[mikem456]

So I am about to file chapter 7. I recently went to a chiropractor for back pain, thinking I was fully covered by my insurance because they told me they accept my insurance. I later found out my insurance only pays 50% of eligible expenses. I received a check made out to me in the mail from my insurance (which never happened before). This check was for around 2000$. So the chiropractor has not been paid anything and I now owe him lots of money. If i file chapter 7 now, will these expenses be discharged, or is it considered fraud because I recently incurred the expenses within one month? Also the court will probably see I received 2000$ from the insurance and did not give it to the doctor. My checking account is currently at a negative balance of 900$ and I cashed the check, so I have 2000 cash now, if I deposit the money in my account this will leave me with some money to afford a bankruptcy lawyer.

Thank you

[bcohen]

The $2000 is intended to pay the chiropractor, and just because the insurance company made a mistake and sent the check to you does not mean you can use the funds for whatever. Obviously, since your checking account is overdrawn by $900, and since overdrawn bank accounts are dischargeable in bankruptcy, it makes absolutely no sense to put any money into this account ever again.

I would suggest to pay the chiropractor with the insurance proceeds. If there is any remaining balance, then you would include that in your bankruptcy, as well as the overdrawn checking account. The debts will be discharged.

[mikem456]

What about the fact that it happened within a week of filing bankruptcy, isn't that considered fradulent?

[LadyInTheRed]

Unless chiropractic is considered a luxury service, incurring the debt would not be fraudulent. I do not know whether using the insurance check for something other than paying the chiropractor would be fraud. But, since the insurance company paid you, paying the chiropractor might be a preference payment that the trustee could take back from the chiropractor to distribute among all of your creditors. I suggest you ask your attorney what to do.

[mikem456]

Thank you Lady In Red