When a person seeks a personal injury claim against a person or company, they are able to get funding to pay for various issues and provide a means to become financially ‘whole’ when everything is over. However, when that person is facing bankruptcy, they could lose these awards based on the type of chapter filed and what is exempt. This article will discuss whether personal injury awards are exempt from bankruptcy proceedings.
Under normal circumstances a general personal injury claim, the victim will have an exemption for the awards through Chapter 7 and Chapter 13 bankruptcy. However, these awards may have a limit on how much is exempt. If the person going through bankruptcy does not disclose the claim or is unsure how to protect the monetary assistance it is likely that they may lose it to debt collectors. There are certain steps that the person needs to take in order to protect these funds when proceeding into bankruptcy Chapter 7 for all debts or a reorganization of expenses of Chapter 13.
When a person suffers an injury at the hands of a company, another person, entity or organization they may file a personal injury claim against them. When specific requirements and evidence are met through the court the person may succeed and receive monetary compensation for the damages and losses they have suffered. Such losses may include medical bills, property damage, physical injuries, emotional or psychological trauma or pain and suffering. Pain and suffering is usually a form of damages that increases the awards to the victim. Once compensation is received the injured person may pay off debts and protect their household.
As with other assets a person has during bankruptcy procedures, it is necessary to disclose personal injury claim. Such a claim is no different from other assets like a house, car or furniture. When pursuing bankruptcy through either Chapter 7 or 13, a personal injury claim, it is crucial to disclose everything relevant to the process. Failure to do so could lead to a loss of any or all awards a person has an entitlement to for their own personal injury settlement. Even if the money is necessary for expenses it will go directly to creditors when received.
In addition, failure to disclose monetary assets, that may include a personal injury settlement received at the end of a claim, could result in criminal liability. The person must disclose these details at the date of the injury or the date that the claim started rather than when receiving the award to ensure the bankruptcy agent is aware of all the relevant factors. This also applies even if the compensation will not transfer until the bankruptcy starts. Therefore, the individual must disclose their personal injury claim in order to prevent criminal charges or further complications.
Generally, there is a misconception that certain important financial details are too personal for the process and must not be disclosed as they need to be protected. However, the debtor could lose the entirety of their personal injury award.
For more information on bankruptcy and personal injury claims contact Wasilla lawyer free consultation today.