If you were left with major injuries from a car accident, you might be able to seek a large settlement from the responsible party through a personal injury lawsuit. This is a right that you have; however, if you are also considering filing bankruptcy, there are several things you should know. Bankruptcy can affect a personal injury claim, so it is wise to handle this situation properly before making any decisions. Here are a few things to understand about bankruptcy and personal injury lawsuits.
You Must Disclose The Lawsuit Information When You File
The first and most important thing you should understand is that you must be honest about the lawsuit when you file for bankruptcy. After the accident occurs, you will have a certain amount of time to file your lawsuit. This time period is called the statute of limitations, and it can vary from one year to six years depending on the state you live in and the type of accident.
When you file for bankruptcy, you must disclose the accident information even if you have not yet filed a lawsuit against the other party. If you have any reason to believe that you will file a lawsuit and receive money from it, you must disclose this information. You must also disclose the details if you have already filed a lawsuit against the person and are waiting for the case to close.
If you recently closed on the case and received a large settlement, you must also reveal this to the court. In this situation, you may have a hard time filing for bankruptcy, though, because the court will look at all your assets. If you received a large settlement, you may have too much money in the bank to be able to file for bankruptcy.
You should realize that if the accident occurs after you file for bankruptcy, the court would most likely not have the right to touch this money. You should still disclose this information to your attorney though.
Why The Court Needs To Know
There are two types of bankruptcy options you can choose, but both can be affected if you are expecting a large lawsuit settlement. Chapter 7 bankruptcy is one choice you may have. If you file for Chapter 7 and then receive a large settlement, you could lose the entire settlement amount. The bankruptcy court can take this money to use for repaying debts that were discharged in the bankruptcy case.
You should realize that the bankruptcy court may have the right to take this settlement amount at any point in time. This means that even if you do not receive your settlement for six years, the court could still take it if you were involved in the case at the time you had filed for bankruptcy.
With Chapter 13, the bankruptcy court can view this settlement money as income, and this could result in an increase in your payments. Chapter 13 is used to repay debts, and it requires making weekly or monthly payments to the trustee for a certain length of time.
Why Seeking Help Is Vital
There are times when bankruptcy is the only option for people. If you are struggling with major debt and are expecting a settlement, you may still need to file for bankruptcy right now. Personal injury cases are not settled overnight. It takes time for the cases to settle, and this can often turn into years. If you need relief now, you should seek advice from an attorney. Your attorney might be able to convince the court to exempt the settlement money from your case. If this can happen, you can file for bankruptcy now and not have to worry about the court taking your settlement money.
The best option you have if you are in this situation is to talk to a personal injury attorney from a law firm like Putnam Lieb about your situation. He or she can help you make the best decisions for your situation.