Personal bankruptcy is designed to provide debt relief to struggling individuals. However, there are consequences of filing for bankruptcy. That is why many consider it as a last option to solve problems related to debt.
When you file for Chapter 7 bankruptcy, your assets can be taken and sold by the trustee of your case. But you can also claim property exemptions allowing you to keep some of your possessions. You can read many good articles about how to protect your home, vehicle or salary in bankruptcy. However, one important issue that is not often addressed is whether a person who has been injured in can keep his or her settlement funds.
You can keep some of your tangible assets under the federal exemptions, but there is not much protection to the more important intangible assets like your personal injury claim. It might look like a considerable amount of money can be protected in a personal injury settlement, which is up to $20,200. But actually the bankruptcy code only protects lost income and medical bills, unless you use your “wild card” – if you do not own a house or home equity, you can claim an addition $21,625 for wild card exemption. Since only personal injury claims on medical bills and wages lost would be considered as exempted assets, there is no assurance that an entire settlement fund will be exempted. Basically, the way a personal injury settlement is classified by your insurance company and bankruptcy attorney is a bigger factor than an injury itself in determining whether a debtor will get to keep the money.
Your ability to keep the injury claim also depends on the “proof of claims” filed by your creditors. Creditors need to file to be included in your bankruptcy. If they are unable to file such documents, it would mean that they have given up their right to get paid from liquidation. The value of this goes to the amount of your property that will be sold off. The non-exempt property to be liquidated is determined by the worth of the claims of your creditors, aside from legal fees. But not all states have a generous bankruptcy exemption rules. If you have questions about which assets you can protect in bankruptcy, talk to a San Antonio Attorney who specializes in bankruptcy cases.
One of the important duties of debtors is to make sure that all assets and liabilities are stated in the required bankruptcy forms. So if you have personal injury settlement funds make sure to declare it because it is a crime to conceal assets. A pending claim that has been concealed will also cause forfeiture of a personal injury claim and the claimant will not recover any money. The fact is defense attorneys regularly run the names of claimants through the public records of bankruptcy to find out whether a claimant has disclosed a claim.
If you have a sizable amount of personal injury settlement, you should talk to a San Antonio Lawyer who is experienced in handling both bankruptcy and personal injury cases. You would want to protect your assets and your rights as much as possible.