By: Chris Reynolds
Share This Post
Will Filing Bankruptcy Affect Your Personal Injury Case?
When financial hardship hits, people sometimes turn to bankruptcy laws for relief. This is not unusual for those with personal injury claims, especially when the injured person can no longer work. Generally, people hire a bankruptcy attorney to guide them through the bankruptcy process. If the person also has an ongoing personal injury claim, the bankruptcy might affect the personal injury claim.
There are many factual scenarios that can happen, so please speak with your attorney about your specific situation. In general, a bankruptcy filing will discharge or reorganize debts you have, and a court will base the bankruptcy plan on the amount of your debts and assets.
Though you may not think of it immediately, a personal injury claim can possibly be considered an asset, so make sure you tell your bankruptcy attorney about any current or potential personal injury claim. Often, a person filing for bankruptcy can request that the bankruptcy court grant a waiver and not consider the personal injury claim. However, if the waiver of the bankruptcy claim is not obtained in the initial disclosures during the bankruptcy filing, the bankruptcy court might be able to take proceeds from the personal injury claim.
If you are considering filing for bankruptcy while you have a personal injury claim, or if you have a current personal injury claim and recently finalized a bankruptcy filing, please make sure you tell both the personal injury attorney and bankruptcy attorney to ensure you are protected. When you hire a personal injury attorney, always tell the personal injury attorney about any recent bankruptcy and any potential upcoming bankruptcy filing. Similarly, when you hire a bankruptcy attorney, always tell your bankruptcy attorney about any recent, current, or potential personal injury claims.
Even if you file for bankruptcy during a personal injury claim, it doesn’t necessarily mean that the bankruptcy court will take all of the personal injury compensation. There are a number of factors that will determine how a bankruptcy court might handle a personal injury settlement, including the amount of the settlement, the type of bankruptcy filed (chapter 7 or 11), and the amount of debt discharged.
The worst thing you can do is to not tell your bankruptcy attorney about the personal injury claim, or fail to tell your personal injury attorney about a bankruptcy claim. If you are unsure, please discuss it with your attorney. Failure to disclose a personal injury claim can have severe penalties for you.
If you have a personal injury claim, contact Chris Reynolds for a free consultation about your options.