If you live in New York, dealing with both a personal injury lawsuit and a bankruptcy can be extremely complicated.
Your Personal Injury Claim is Considered an Asset
Regardless of which came first – your personal injury claim or your declaration of bankruptcy – your personal injury claim is going to be considered an asset in your estate, even if you haven’t won anything yet. So, it is vital that you get your personal injury attorney and your bankruptcy attorney working together.
If you already have a personal injury claim in process when you declare bankruptcy, you will need to list any funds you are expected to receive if you win the lawsuit.
If you are in an accident while you are in the bankruptcy process, and wish to start a personal injury claim, you will have to notify your bankruptcy lawyer and court trustee about the claim and have it added to your potential assets.
If you are in an accident while you are in the bankruptcy process and are even thinking about starting a personal injury claim, talk to your bankruptcy attorney first. You may have to add the potential claim to your assets, even if you haven’t actually started the claim yet.
If you don’t notify your bankruptcy trustee about your ongoing (or potential) personal injury claim, you risk what is known as judicial estoppel. This is a legal term that pretty much means you can’t say one thing to one court (“I don’t have money to pay my bills”) and the opposite thing to different court (“I should be awarded money for my bills”).
In your personal injury claim, if the entity you are suing can show that you didn’t list the claim as part of your bankruptcy assets, they can have your claim immediately dismissed. In your bankruptcy suit, the trustee may see you not listing the claim as potential fraud, which would bring up a whole new set of complications.
What Happens if You Win the Personal Injury Suit?
Like with many legal questions, it depends.
If you win the personal injury claim after your bankruptcy has been finalized, then yes, you can keep the entire award.
If you win during your bankruptcy process, your trustee will add your reward to your list of assets. If you are in the process of Chapter 7 bankruptcy, talk to your bankruptcy attorney about exemptions. There are exemptions available that may allow you to keep all or part of your personal injury settlement or award. In New York, bankruptcy filers can choose between the federal exemptions or state exemptions.
If you are in the process of Chapter 13 bankruptcy, things can get a bit more complicated. Since Chapter 13 bankruptcies take from 3-5 years, if your assets materially change during the process (such as winning a personal injury award) your creditors can bring suit to alter your agreed upon repayment plans. Make sure you are working closely with your bankruptcy lawyer to ensure you have all the information you need to make the choices that work best for you.
Other Things to Know
What to Do Now
Whether you were injured before or after declaring bankruptcy, you are going to need to make sure your bankruptcy attorney and your personal injury attorney work closely together. You will need to keep both lawyers in the loop with any changes or information they will need to help you through the court system. To learn more about the topic, click here.
When it comes to the bankruptcy process, reach out to New York bankruptcy attorney Ronald Weiss for a free consultation. He can guide you through the available options for your specific needs. Ron can get the process started and will be at your side the whole time. Call 631-271-3737 and take the first step to a fresh start.