Florida medical malpractice and injury lawyer, Guy S. DiMartino, discussed the impact of filing bankruptcy on a pending personal injury claim
I know that times are tough. Many people live from paycheck to paycheck and when they're injured in an accident, they can really fall behind on bills. Sometimes these folks see no way out and seek counsel from a bankruptcy attorney. I can't tell you how many times, I found out from a client that I was representing in a personal injury claim that they filed bankruptcy. My response to them and to you – is that you should have discussed the matter with me because your bankruptcy can impact your personal injury case.
Chapter 7 – Bankruptcy and your Personal Injury Claim
Generally, for individuals there are two types of bankruptcy: (1) total liquidation (chapter 7); and (2) personal reorganization (chapter 13). When most people think of bankruptcy they think of liquidating all their debts in chapter 7.
If you file a chapter 7 bankruptcy, the bankruptcy trustee is responsible for identifying all assets and potential assets and getting money for the creditors. In chapter 7, the personal injury client loses the ability to prosecute their claim. The bankruptcy trustee becomes the claimant and he/she will use the proceeds to first pay the creditors. If there are any monies left over after bankruptcy fees and payment to the creditors, the personal injury claimant may receive proceeds. For an injured person with a pending personal injury claim – chapter 7 is usually not the best option. However, this would need to be discussed with both your personal injury lawyer and a bankruptcy lawyer.
Chapter 13 – Bankruptcy and your Personal Injury Claim
Generally, I like to look at chapter 13 bankruptcy as personal reorganization. We see companies reorganize all the time – under chapter 11. Chapter 13 will take the heat of the creditors off the claimant and the claimant will enter a reorganization plan. An injured person who files for chapter 13 bankruptcy protection does not hand their personal injury claim over the bankruptcy trustee. These folks continue control their case, and if they receive monies for their injuries, the bankruptcy court will be notified and the funds may become part of the plan. Again, issues regarding a personal injury claim and filing a chapter 13 bankruptcy should be discussed with both lawyers.
Sometimes clients get overwhelmed after an accident and just want things to be done with so they might visit a bankruptcy lawyer without first consulting their personal injury lawyer. Nothing good can come out of this situation. A personal injury client has to be open and honest with their lawyer about all things.
If you have any questions about a Florida medical malpractice or personal injury claim, you can give me a call at (352) 267-9168 or fill out the internet consultation box on the right of the screen.