Personal Injury Claims and Bankruptcy

Personal Injury Claims and Bankruptcy

If you have unfortunately been injured in a car accident, injured at work or at a business you were shopping at you could have a personal injury, or PI, claim. So if you have filed a lawsuit or are planning on filing a lawsuit what happens to your personal injury claim if you file for bankruptcy protection with the help of an experienced bankruptcy attorney under Chapter 7 or Chapter 13 of the Bankruptcy Code?

The first issue is do you actually have a PI claim? There have been many attempts to bootstrap other types of causes of action as exempt under a personal injury theory. For purposes of this article the person filing for bankruptcy was in fact injured in a car accident and suffered damage to their arm requiring surgery. This hypothetical person is also thinking about suing the person who hit their car and caused the injury. Unfortunately they are also thinking about filing for bankruptcy since they have not been able to keep up with their credit card payments given that they cannot work as much due to their injury. This is a personal injury in which the California exemptions can be applied, either Section 704.140 (a-b) or Section 703.140(b)(11)(D).

So if you receive a multi-million dollar settlement can you keep every penny and still get rid of your debts in bankruptcy? The answer is it depends. Under the 703 California Exemptions you can protect a personal injury claim up to $22,075. This is only for your injuries and not for pain and suffering or pecuniary (financial) loss. Under the 704 California Exemptions a PI claim is exempt up the amount reasonably necessary for the maintenance and support of the judgment debtor’s spouse and dependents. Which set of exemptions you use will depend upon the nature of the injury and the possible recovery. If you were unfortunately seriously injured and require around the clock care you will most likely need every penny of a personal injury recovery. Keeping every penny would be reasonably necessary for your support and maintenance. The other extreme is if you are in a car accident and merely break an arm and do not have any long-term problems as a result. If you receive $30,000 somehow it may not all be reasonably necessary for your care and support.

Hopefully you will not be injured so severely that you are entitled to millions of dollars of compensation. There are personal injury awards that can be protected when filing bankruptcy. It all depends upon your circumstances at the time you file for bankruptcy protection. The good news is that there are exemptions to protect personal injury awards and claims.

Source by Ryan C Wood

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