Monthly Archives: September 2021

I am receiving an insurance settlement from my car accident. When does the hospital lien attach, and can bankruptcy discharge that lien?

Complicated answer: The hospital lien immediately attaches to any settlement or insurance proceeds, and bankruptcy does NOT discharge that lien.

Generally, your insurance proceeds/settlement are exempt, or safe from creditors (and the bankruptcy trustee) under Utah law. See

Utah Code 78B-5-505 (1)(a)(x) “An individual is entitled to exemption of… proceeds of insurance, a judgment, or a settlement, or other rights accruing as a result of bodily injury of the individual or of the wrongful death or bodily injury of another individual of whom the individual was or is a dependent to the extent that those proceeds are compensatory.

However, before you file bankruptcy, your hospital creditors have an opportunity to file a “hospital lien,” which is a lien or claim against those insurance monies.

Below, I am going to cover the hospital lien statute in a little more depth and give a recent Utah bankruptcy case dealing with when the lien attaches.

Hospital Lien Statute (Utah Code 38-7-1):

The hospital lien attaches automatically, but is only perfected after:

  1. medical services are provided
  2. notice of the lien is given
  3. the lien is then perfected when verified written notice is filed in the state district court where the hospital is located, and
  4. the notice of lien must be sent by certified mail to the person/parties liable for the injuries and to the insurance carrier.

In fact, the hospital can perfect its lien after you file bankruptcy. Filing bankruptcy does NOT get rid of their lien, and their perfection of that lien does NOT violate bk law.

Now what if they haven’t even provided notice of the lien before filing bankruptcy? I’m not sure. Someone is going to have to take that argument before the bankruptcy court.

The United States Bankruptcy Court for the District of Utah covered this issue in In Re Cloward, 608 B.R. 759 (Bank.D.Utah 2019) here.

What is the statute of limitations for medical bills and credit cards collecting on me?

It varies a lot. Here in Utah, you can count on 6 years being about standard.

The statute of limitations means the amount of time a creditor has to file a lawsuit against you for some kind of debt. For example, you had a medical procedure done 10 years ago, and they just barely got around to filing a lawsuit against you in state court. That lawsuit could be thrown out if you assert the defense that the statute of limitations has run.

Basically, the debt is too old, and they missed their chance.

Here in Utah, the statutes of limitation for debt collection look like this:

8 years

judgment — 8 years from date of judgment (unless they renew it, then the 8 years starts again)

6 years

credit cards — 6 years from date on signed contract or 4 years from last payment received

car loan — (it’s a signed contract)

gym membership — (it it’s a written agreement, otherwise only 4)

medical debt — (6 years or 4 years, depending on whether or not there’s a written contract)

4 years

store accounts (like an RC Willey account)

for work performed (without a contract)

open account for services or materials — (no contract here either)

verbal contract — (Not in writing. That’s why is says “verbal.”)

3 years

fraud — 3 years from date of discovery (when the defrauded person learns that he’s been defrauded)

2 years

wrongful death

1 year

libel, slander, false imprisonment, or seduction — 1 year (and to be honest, I’ve never had a seduction case before, dang it!)

Here are the actual statutes:

1 year

78B-2-302

An action may be brought within one year:

(4) for libel, slander, false imprisonment, or seduction;

2 years

78B-2-304

An action may be brought within two years:

(2) for recovery of damages for a death caused by the wrongful act or neglect of another;

3 years

78B-2-305

An action may be brought within three years:

(2) for taking, detaining, or injuring personal property, including actions for specific recovery; except that in cases where the subject of the action is a domestic animal usually included in the term “livestock,” which at the time of its loss has a recorded mark or brand, if the animal strayed or was stolen from the true owner without the owner’s fault, the cause does not accrue until the owner has actual knowledge of facts that would put a reasonable person upon inquiry as to the possession of the animal by the defendant;
(3) for relief on the ground of fraud or mistake; except that the cause of action does not accrue until the discovery by the aggrieved party of the facts constituting the fraud or mistake;

4 years

78B-2-307

An action may be brought within four years:
(1) after the last charge is made or the last payment is received:
(a) upon a contract, obligation, or liability not founded upon an instrument in writing;
(b) on an open store account for any goods, wares, or merchandise; or
(c) on an open account for work, labor or services rendered, or materials furnished;

6 years

78B-2-309

(1) An action may be brought within six years:
(a) for the mesne profits of real property;
(b) subject to Subsection (2), upon any contract, obligation, or liability founded upon an instrument in writing, except those mentioned in Section 78B-2-311; or
(c) to recover fire suppression costs or other damages caused by wildland fire.
(2) For a credit agreement, as defined in Section 25-5-4, the six-year period described in Subsection (1) begins the later of the day on which:
(a) the debt arose;
(b) the debtor makes a written acknowledgment of the debt or a promise to pay the debt; or
(c) the debtor or a third party makes a payment on the debt.

What happens to my personal injury lawsuit or settlement when I file bankruptcy?

Nothing.

(Last week I went to lunch with a personal injury attorney. He paid, because I do poverty law. I wanted to be well-versed in the intersection of personal injury law and bankruptcy law, so I went to my own blog from 2014 and then did some research to see if anything had changed. Nothing has changed. The old blog post is here: https://robertspaynelaw.com/myutahbankruptcyblog/2014/01/23/what-happens-to-my-personal-injury-suit-or-settlement-when-i-go-bankruptcy/ )

At least, nothing will  happen to it if you do it right.  Under the Utah Exemptions Act, you can exempt (protect)

proceeds of insurance, a judgment, or a settlement, or other rights accruing as a result of bodily injury of the individual or of the wrongful death or bodily injury of another individual of whom the individual was or is a dependent to the extent that those proceeds are compensatory.

What this means is that if you are already receiving a personal injury settlement payment each month, or a lump sum settlement, that money is protected from creditors and from the bankruptcy trustee demanding turnover, so long as the damages you’re being paid for are compensatory in nature.  In other words, if the settlement’s terms state that it is to compensate you for pain and suffering or compensate you for something, then the money is safe.  On the other hand, if the money coming to you is a result of punitive damages, that is bad.  It is not exempt, and you will lose it.

Compensatory = good.   Punitive = bad.

Now what happens if you’re involved in a personal injury suit that hasn’t been settled yet and you have to file bankruptcy?  The trustee may allow your attorney to stay on the case but will want updates on how the settlement is going.  There is a very tiny chance that the trustee will want you to use a different attorney, and he will appoint a different attorney to your case.  This is very rare.

But, if the case eventually settles for compensatory damages, then you’re okay.