If you are involved in a legal case or you have become involved in a legal case while you are undergoing bankruptcy, you may be wondering if you can still access the compensation you may be receiving from a personal injury settlement. If you’ve been involved in a case where you will be compensated for lost income, pain and suffering or medical bills, the idea of losing out on this settlement could be very difficult to grasp. The short answer is that you likely won’t be able to keep all of your settlement but it is possible to protect some of the settlement you receive as a result of a personal injury case.
Chapter 7 Bankruptcy and Personal Injury
Chapter 7 bankruptcy will wipe out certain debts by taking non-exempt property and assets and then selling them. Any personal injury settlement is also considered an asset and when you’re considering bankruptcy you’ll need to analyze how much you can exempt. Almost all of the settlement is not exact and it could be immediately seized by the bankruptcy trustee. There is only one situation where you can have protection. If you were injured as a result of a hazardous occupation, any settlement proceeds cannot be garnished or taken for debt settlement. Under a Chapter 7 bankruptcy you can exempt up to $4000 in personal property if you are not using a homestead exemption. $4000 of your settlement could be covered using this protection or $1000 should you choose to exempt your personal property.
Chapter 13 and Settlements For Personal Injury
Chapter 13 allows consumers to keep non-exempt property but they will have to use disposable income to pay creditors each month. Depending on the circumstances of your case, you could see a larger amount of disposable income. It’s unlikely that you will lose your settlement in chapter 13 but it is much more likely that you’ll face higher payments. A sizable percentage of your settlement may be used just to keep up with these higher payments from your larger representative disposable income.
If you are facing a personal injury settlement and considering filing for bankruptcy contact us today. We are skilled bankruptcy attorneys capable of helping you keep hold of as much property and settlement assets as possible!
This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation. Click here to learn more!
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