When you are considering filing a Chapter 7 or Chapter 13, you typically worry about what physical assets will be included in your bankruptcy estate. However, it is also essential that you consider your intangible assets as well. For instance, if you were involved in a traffic accident and a court awarded you a monetary judgement or you entered in a settlement to recover your damages suffered, you should confer with your bankruptcy lawyer to determine how those funds will be treated in your filing.
All debtors are required to disclose every kind of asset they own, including a claim from a personal injury. Even if you have not filed a personal injury lawsuit prior to filing for bankruptcy, you must disclose your potential claim. The trustee must be notified that you could potentially receive a monetary award in the future. Failing to make this disclosure could be considered fraud.
If you file a Chapter 7 case, you can claim an exemption to protect all or a certain amount of certain types of assets. In the case of a personal injury settlement, the debtor can claim an exemption to the “extent reasonably necessary for support of the judgment debtor and the spouse and dependents of the judgment debtor.” Cal. Civ. Proc. Code §§ 704.140(d), 704.150(c). In many cases, the Chapter 7 trustee may abandon the debtor’s claim, especially if the trustee believes that the settlement will be significantly reduced after the debtor pays the personal injury lawyer’s fees and the medical liens.
If you file a Chapter 13 case, you will submit a repayment plan outlining how you will pay your debts over a period of three to five years. Depending upon the amount of your personal injury settlement and whether it exceeds the amount that would have been exempt in a Chapter 7 case, may increase the overall amount you must pay through your plan.
If you have a personal injury or wrongful death claim and you are considering filing for bankruptcy protection, it is imperative that you discuss your options with an experienced bankruptcy attorney. We can help you preserve and protect as much of the award or settlement as possible.
The personal bankruptcy process can be simple and effortless if you retain an attorney who will explain the steps to you. Ms. Anderson is dedicated to walking you through each step, explaining the process along the way. At The Law Office of Diane Anderson, we are determined to help our clients obtain the best results possible.