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How Bankruptcy Affects Your Personal Injury Case

If you have filed for bankruptcy you need to know how this affects your case and your ability to win a settlement or get rid of debt from a case against you.

Bankruptcy involves a lot of paperwork and a lot of complicated procedures, so this blog will attempt to explain things simply from the plaintiffs perspective and the defendant’s perspective.

The Bankrupt Plaintiff in a Personal Injury Case

If you filed for bankruptcy before the incident of injury, then the trustees and creditors have no claim on your settlement in the personal injury case.

If you have filed for Bankruptcy after filing a personal injury claim, you can still be entitled to compensation. However, you will need a lawyer who understands the complex procedures behind a personal injury case while the plaintiff has filed for bankruptcy.

Here are requirements the debtor/plaintiff has to follow to ensure a good outcome in a personal injury case. The personal injury lawyer also has a long list of extra responsibilities and will help the debtor/plaintiff ensure proper procedure :

  • Bankruptcy is commenced by the filing of a bankruptcy petition. After commencement, the Bankruptcy Code requires that the debtor promptly file schedules listing detailed information about the debtor’s financial situation.
  • These lists include: real and personal property, a list of the exemptions, information on the debtor’s income and expenses, lists of all debtor’s creditors, and more. Personal injury claims must be recorded in these schedules
  • The debtor’s/plaintiff’s exemption scheme provides lists of what is protected by law from the debtor’s creditors. The debtor elects either the state (Texas) or federal exemption scheme.
  • Texas doesn’t have exemptions from personal injury claims so, if you are a plaintiff, you will have to elect the federal exemptions scheme.
  • Exemptions will allow a plaintiff to keep all or part of a settlement amount when a personal injury claim is filed before bankruptcy.
  • To avoid losing your case over to trustees or not having proper representation in your case you will need a personal injury lawyer who understands bankruptcy procedures.

The Bankrupt Defendant in a Personal Injury Case

All the time, great people end up in situations that don’t reflect their character. Sure maybe it was your mistake and a poor choice, but if you are in debt and bankruptcy, seeing “DEFENDANT” on a letter in the mailbox is the last thing for you esteem. However, don’t worry.

You file for bankruptcy to help you get back on your feet. When you file, you put an “Automatic Stay” on any lawsuits from creditors pending against you. This means that any lawsuits filed against you can be stopped and debts (the debts that are the dispute of the lawsuit) will be discharged before, during, or after a lawsuit is filed. The automatic stay even keep the IRS from pursuing collections from the debtor.

Contact An Attorney

Find a lawyer you can trust and who has experience in the with bankruptcy cases. Contact us today for a free consultation.