Posted by David Leibowitz on January 29th, 2009 in Bankruptcy, Chapter 7, Exemptions, bankruptcy planning, Exemptions, personal injury claim, tort claim
If you file a bankruptcy case, you must list all of your assets. This includes lawsuits for personal injury claims. It also includes personal injury claims even if you have not yet filed a lawsuit.
Failure to list all assets in a bankruptcy case could lead to loss of your discharge in bankruptcy or even criminal prosecution.
You can exempt a portion of your claim – up to $15,000 in Illinois and up to $25,000 in Wisconsin.
Many people who have been involved in automobile accidents or medical malpractice claims find themselves facing bankruptcy during the long delays prior to trial or settlement. Unfortunately, their personal injury attorneys frequently have no experience with bankruptcy. And it would be unethical for them to help their clients out financially while waiting for trial or settlement. Even worse are the companies who try to get the victim to sell a portion of his personal injury claim for a big discount in order to pay living expenses.
So victims of automobile accidents or other major tort claims may have to file a bankruptcy case before they get their settlement.
Tell your bankruptcy lawyer about these claims. We at Lakelaw will ask you.
If you file a bankruptcy case, you won’t “lose” your rights. If you have a smaller claim, it will be exempt from creditors. If you have a larger claim, you will keep the first $15,000 in Illinois or the first $25,000 in Wisconsin. The next dollars will go to pay your creditors until they are paid in full. And if you were unfortunate to have suffered a significant claim, you will get to keep the balance. Sometimes, a personal injury claim settlement can be structured so that a significant part is allocated to your wife or family. If these people are not filing a bankruptcy case, this may be a legitimate way to protect your claim from creditors.
We will work with your personal injury lawyer to maximize the amount of money you keep from your personal injury settlement even though you are filing a bankruptcy case.