Many bankruptcy cases are filed due to a job loss or temporary unemployment due to a medical issue. Often times this job loss or temporary unemployment arises out of a car accident or injury for which a personal injury action is pending. Unfortunately, personal injury cases have the habit of taking their time to settle and can legitimately leave that person hurting financially in addition to physically. In these cases, a question often asked is, “Will I lose my personal injury settlement if I file bankruptcy?”
The answer — just like many other answers in the law is — it depends.
A personal injury settlement can be protected up to a certain amount of money with its own personal injury exemption and sometimes additional settlement or court awarded funds can be protected with leftover “wildcard” exemption. This means that the amount of exemptions available to apply against the award or settlement amount is going to be key. We will be able to protect some of it, maybe even all of it in some settlements, with the following caveat: If you have a fairly large settlement coming your way from a personal injury case some, your creditors may get paid some or all of the debt owed them with our office protecting as much as we can given the available exemptions. The bottom line is: We can protect some amount of the award or settlement from your personal injury case. In some instances we can protect it all. In other cases we can protect some portion of it even when you are going to have to pay some of it into your bankruptcy case for payment to your creditors.
Chapter 7 vs. Chapter 13
There is a bit of strategy involved in whether you should file a Chapter 7 or a Chapter 13 in cases like this, so it is important that you hire an experienced bankruptcy attorney to assess how your case should be handled and what you can expect to accomplish in your bankruptcy case. Your discussion with your bankruptcy attorney will be a big factor in your decision as to what Chapter or type of bankruptcy case is in your best interest under your particular circumstances.
Since there are so many factors that have to be considered, it would be best for you to consult with an experienced bankruptcy attorney. My 30+ years of legal experience and my 25+ years involved in consumer bankruptcy cases – many involving personal injury cases – can give you confidence in our recommendations regarding the intersection of your personal injury case and your bankruptcy case.
“But my cousin filed with a personal injury suit and she didn’t have to do ……”
I know… No two bankruptcy cases are the same. Your cousin who had a lawsuit could have filed a bankruptcy case with my office and I may have approached the case in a completely different manner because the circumstances of the two cases different and the goals to be achieved differed. So don’t be surprised when I want to have a nice long chat about your personal injury cases, your personal circumstances and the goals to be achieved and my recommendations differ from what was recommended to your cousin.
If you are interested in learning more about how we can help you with your bankruptcy and personal injury claim, give our office a call at 732-302-9600 or fill out our online consultation form and we will call you!