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What happens if I file bankruptcy while my personal injury case is pending?

By Josh Silverman on November 15, 2013


A harsh reality is that personal injury cases can take time to resolve while medical bills accumulate.  The struggle is compounded by lost income during the personal injury claimant's recovery.  Many of my clients do not have health insurance so I am very familiar with the financial struggles that often follow a serious personal injury.  Even those who have health insurance can be overwhelmed with debt due to co-payments and deductibles.  Many personal injury victims receive collection letters and some are even sued for medical bills.

All of this unfortunately forces many people to consider filing for bankruptcy.  If you are in that position you absolutely must let your personal injury attorney know that you are considering filing for bankruptcy and you must let your bankruptcy lawyer know that you have a pending personal injury case.  

A basic principle in bankruptcy law is that all assets of the person filing for bankruptcy (the "debtor") becomes the property of the bankruptcy trustee unless the property is exempt.  Under Virginia law, personal injury claims are considered exempt.  However, they are only exempt if they are properly listed on the bankruptcy petition as an exempt asset.  About two years ago the Virginia Supreme Court held that failure to list a personal injury claim as exempt meant the claim was forfeited.  It was a financially devastating mistake that could have been avoided by simply listing the claim as an exempt asset.

This is just a summary of a very complicated area of law.  If you have already filed for bankruptcy, but did not list the personal injury claim as an exemption it may not be too late to fix the problem.  I've worked with bankruptcy lawyers to successfully fix these problems.  You should contact your lawyers immediately because if the bankruptcy is finalized without fixing the problem by amending the petition it may be too late.

If you have suffered from a personal injury, we understand the financial struggles that you may be facing.  There is an important balance between aggressive fighting with the insurance company and compassionately understanding the struggles of our client.  Feel free to call us at (804) 325-4992 for a free and confidential consultation.

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