Can You File Bankruptcy While You Have a Personal Injury Case Pending?

If you are in an accident, you may also be under serious financial strain. So much strain, you may be considering bankruptcy. But bankruptcy can seriously affect your injury case or claim.

Why are You Filing?

The first question is to ask yourself why you are filing for bankruptcy.

If you are filing bankruptcy for bills or expenses related to your accident, speak with your injury attorney. He or she may be able to negotiate with your creditors (mostly, your medical providers), and get them to hold off on collections, or, at the conclusion of your case, get them to accept a reduced amount, thus saving you from having to file for bankruptcy in the first place.

Risking Your Compensation

If the reason you are filing for bankruptcy is unrelated to anything having to do with the accident, then you need to make a decision.

Certainly, there are times when we need immediate financial relief, now. We cannot hold off creditors any longer, so the bankruptcy must be filed.

But the problem is that if you do file for bankruptcy before your injury case is resolved, and while the case is going on, you risk losing most, if not all of what you might recover in the injury lawsuit or claim. That’s because your lawsuit and the proceeds or funds you would anticipate receiving in your lawsuit, whether by settlement or jury verdict, is property that the bankruptcy court can potentially take, to satisfy your debts.

You do get a small exemption in bankruptcy, and if your potential compensation in your injury case is small enough you may be able to continue your case, and keep the compensation. But in most cases, someone who is injured, is suing for much more than what the exemption limit is in bankruptcy.

Leaving it Out

Federal law (and common morals and ethics) also prohibit lying to the bankruptcy court, by omitting your injury claim from your bankruptcy paperwork. If the claim is omitted,aside from being punished by the bankruptcy court, you may also be barred from ever collecting against any defendant you may sue in your injury case.

After the Injury Case is Over

If you wait to file bankruptcy until your case is over, you may have to speak with a bankruptcy attorney about ways to structure the money, or ways to use the funds you received from the personal injury lawsuit, in ways that the bankruptcy court can’t take.

Otherwise, when you do file for bankruptcy, all the compensation received from your injury case, which would, presumably, be sitting in bank accounts, could still be taken by the bankruptcy court.

Of course, it’s easy to say “wait until your injury lawsuit is over to file for bankruptcy,” even if that is the smarter option. But everybody’s financial situation is different. If you do feel you are in immediate need for a bankruptcy, but you have a personal injury case pending, speak with both your injury and bankruptcy attorney, to coordinate ways to preserve your compensation.

Accidents can cause mental, emotional and financial strain. Call the Tampa personal injury lawyers at Barbas, Nunez, Sanders, Butler & Hovsepian after any accident and to schedule a consultation today.

Source:

leg.state.fl.us/statutes