If you are injured in an auto accident or other type of incident caused by the negligence of another person, you have the opportunity to recover for your medical bills and other losses by filing a personal injury claim in civil court. If you prevail in your case, you will receive financial compensation in the form of a personal injury award or settlement.
If you file for Chapter 7 bankruptcy,1 the bankruptcy trustee assigned to your case will seize some of your assets and property for liquidation in order to pay your creditors as much as possible prior to discharge of your debts. This leads a some bankruptcy filers who recently suffered injury to wonder whether they will lose their personal injury award as part of their liquidation bankruptcy.
Personal Injury Exemption
New York state law2 saves bankruptcy filers from losing all of their valued property by providing a number of exemptions from liquidation. For example, you may keep a certain amount of equity in your home or car, certain personal property, insurance benefits, and more. One exemption addresses any personal injury recoveries that you may have received in a separate case.
The law allows you to keep up to $7,500 of a personal injury award that was meant to compensate financial losses. The exemption does not allow you to keep any personal injury recoveries that were meant to reimburse you for intangible losses, such as pain and suffering. If your injuries were relatively minor, chances are that your award was less than $7,500 and you will be able to hold on to that money.
If your personal injury award was greater than $7,500, you will want to discuss your options with a bankruptcy attorney. An attorney can advise you on the best way to use exemptions and other strategies to lawfully hold onto your valuable property and assets. In some case, if your award is particularly large, you may want to consider filing for Chapter 13 bankruptcy instead.
If you are considering Chapter 7 bankruptcy, you likely have a lot of questions. Please do not hesitate to call the office of experienced Long Island bankruptcy attorney Ronald D. Weiss at 631-296-0309 for a free consultation.