I am awaiting a settlement offer for an auto accident and wonder if I must repay the cost of my medical bills?
I am asking on behalf of a friend that lives in California and I don’t know the legal requirements and the person’s lawyer hasn’t made herself clear on how the settlement process works. Is there a rule of thumb, like a personal injury is equal to the amount of medical bills incurred. Is this money taxable?
I went through this and found out that, in fact, you are responsible for your bills no matter what. Sometimes creditors will work with you on your bills. I ended up letting all of my bills from my accident go to collections and then negotiating with the collections agencies to pay less than the original bills were. Generally a settlement is the cost of the medical bills times 3. The extra is for pain and suffering. Typically, this money is not taxable unless you profit from it. For example, if you took two thousand dollars from your settlement and invested it in the stock market and made 500 dollars, that two thousand you invested and the 500 you made are then taxable. Tell your friend good luck, it’s a long and trying process.
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