Insurance Company wants reimbursement from accident included in BK7

[Seventy]

My spouse and I filed BK7 Pro Se in March 2019, spouse was in an accident in July of 2018, spouse was injured and used health insurance to cover cost of treatment, including $50 co-payments for specialist.

We included this accident and a good estimate the at fault insurance company may pay my spouse for his out of pocket injuries from the accident, additionally we had Med Pay $2,000 from our car insurance company.

The Lawyers office settled and paid my spouse the day before our 341 meeting, the trustee was livid at the fact that the lawyer paid my spouse knowing he had filed BK7, with all this being declared our BK7 was discharged Mid June 2019.

Fast forward Jan 20th 2020, I receive a letter from my insurance company that they were informed that my spouse settled the insurance claim and that their company is due $2500 dollars for the medical cost they covered.

My question is, we hid nothing from the court, would this be considered a violation of the court for trying to collect on a debt that was discharged and included in the Bankruptcy? Can this debt be included in the BK filed if for some reason it was not included?

I just feel so overwhelmed by these debt ghost that pop up from our past. It just seems we cannot get a foot hold.

[justbroke]

I can't give a yes/no answer on this because this is a very fact-specific and State-specific legal question.

See In Re Bergman. Although an Ohio Case, it goes to the heart of what they call a subrogation clause.

For Georgia, and most States, there are specific laws that allow the insurance company to recover from settlements. It includes some language in the settlement that is "allocated to those categories of damages" in the settlement documents. To me, that reads as though if the settlement has a category called "medical expenses" then the insurance company, having paid for medical expenses, may be able to claim a portion or all of the amount. There's other language about pro rata shares with the attorney or record. The key will be just what is in the settlement.

Your recourse is to go back to your PI attorney and ask them specifically.

[flashoflight]

Your PI attorney had much more leverage to deal with subrogation before you settled with the defendant. It is very bad that this didn’t get dealt with pre-settlement.

[justbroke]

I'm just going to add a little more. Chapter 7 Trustees have been known to take over PI lawsuits and bring them under the bankruptcy court's jurisdiction and squeeze out more. I'm wondering if the Trustee was also upset that the PI attorney didn't work with the Trustee on the nature, scope and terms of the settlement.

Unless this bankruptcy case is closed, I would be concerned that the Chapter 7 Trustee is keeping it over and figuring out how to reinsert themselves, including having the settlement overturned. It's a stretch, but just thinking aloud.

Is the bankruptcy case closed?

[despritfreya]

justbroke I really don't have much for this thread but I do think Georgia has an exemption for personal injury claims. I think it is a $10k exemption that can be stacked but I am not sure. I would also think that if the insurance company has a claim to subrogation (or some sort of medical lien), it should have been in contact with the PI attny. Wonder if there is some exposure to the PI attny if payment was not made. This is out of my area so I am just throwing it out there as food for thought.

Des.

[justbroke]

despritfreya I'm wondering about the PI attorney as well. They have already drawn the ire of the Trustee, so I wonder if there are other issues.

[Seventy]

This BK7 was closed. I saw issues as well, my spouse is the primary reason our 341 was more than 20 minutes, but the trustee also saw that our income was insufficient.

[justbroke]

That's at least good that the Trustee didn't want to look further into the lawsuit. The bankruptcy likely didn't get rid of the issue with the insurer. The only way to determine your next step, is to go back to the PI attorney. As I suggested, and as Des actually wrote, the PI Attorney and the insurer usually work together on the settlement.