Are you considering filing bankruptcy but you have a personal injury claim pending?
Whether the injury claim is in court, delayed by insurance settlement troubles or you haven’t made a decision to pursue the claim though the statute of limitations hasn’t already run, this is an asset.
At the same time, the case may involve serious or slight injuries. Injury claims or any claim standing for potential dollars in the bank must be disclosed when filing bankruptcy.
Disclose Personal Injury Claims in Bankruptcy
All assets have to be disclosed by those filing bankruptcy, even when the specific sum amount of the ultimate settlement is presently unknown. Bankruptcy Schedule B calls for listing all the assets. The prospective personal injuries recovery should be recognized and noted as ‘contingent’ in that the last amount is honestly unknown.
Preventing disclosure in bankruptcy is not a good idea. The Feds have their own sources of information and when they discover there was an undisclosed asset, they can take it away, challenge the bankruptcy discharge, revoke the discharge and/or prosecuted for bankruptcy fraud.
Exempt the Personal Injury Case
Different tax remissions exist in bankruptcy law to possibly protect the specific value of your personal injury claim. However, they’re limited.
These remissions differ from state to state. A wildcard remission could often be used to claim an exemption for the prospective personal injury settlement, according to how much wildcard is available.
There are additional federal remissions readily available to apply to injury lawsuits, yet they can be challenging to apply:
The federal wildcard exemption is currently $1,250 plus up to $11,850 of any type of extra part of the federal homestead exemption approximately $12,250. If you are married, you are able to increase this amount by filing together. But this means you do not require the exemption to protect home equity or any other property.
Another federal remission specifically for personal injury situations exempts a payment not more than $15,000, on the condition of individual bodily injury not including pain and suffering or compensation for actual monetary loss, of the debtor or a person of whom the debtor is a dependent.
And also there’s the federal exemption covering a settlement in compensation for loss of future profits of the borrower or an individual of whom the debtor is or was a reliant, to the degree fairly required for the support of the debtor and also any reliant of the debtor.
ARE PERSONAL INJURY CLAIMS IN BANKRUPTCY CONTROLLED?
If you file for bankruptcy, your personal injury attorney must get approval from the Trustee to continue with the case.
Chapter7: If the personal injury situation settles or goes to judgment for more than available remissions, after that the Chapter 7 trustee collects the money, pays you the exempt amount, though the remainder is distributed to creditors. Anything left after paying creditors is yours.
Chapter 13: According to Chapter 13, when there’s a recovery, you must change your plan if it did not provide for full payment to all creditors, turning over nonexempt funds to your creditors.
FILING BANKRUPTCY WITH A PERSONAL INJURY CASE OUTSTANDING
Other difficulties include that if the personal injury claim is in court, it should be identified on another form, the ‘Statement of Financial Affairs”. In order to legitimately protect more of a pending personal injury claim if a bankruptcy declaring is necessary it’s smart to retain an experienced bankruptcy atto