Injury Cases and Bankruptcy

Injury Cases and BankruptcyWhenever I sign up a new injury client, I always inquire about the possibility of their filing bankruptcy in the near future. It is an important topic that needs to be explored since it can make the difference between securing a settlement for a client, and getting the client nothing.

Since personal injury cases usually take months or sometimes years to resolve, an attorney doesn’t know the financial situation the client is in or will face in the near future and bringing it up early on is essential.

If an injured person doesn’t have medical or health insurance and they’re injured in an incident, the bills will soon begin to pile up. If they cannot work for a time or if they lost their job as a result of their injury, they may not even have any resources coming in to pay those medical bills and ordinary household expenses.

Here comes the dilemma: When the client is in a financial downspin as medical bills pile up, they sometimes panic and hire a separate bankruptcy lawyer to alleviate their monetary problems.

And here’s the bad news: Once a bankruptcy has been filed, you no longer are in full control of the destiny of your personal injury case. Any asset you have is essentially assigned to a bankruptcy trustee to help pay your creditors. Your personal injury claim is actually a future asset. It too will be assigned to the trustee and you most likely will see nothing from your claim because the bankruptcy. Your creditors will, though.

Oftentimes, bankruptcy attorneys don’t ask this of their new clients and most of the time the client doesn’t know enough to associate “assets” with an injury claim. This issue has plagued more than one client over the years. The ironic part is, many people in bankruptcy are there precisely because of their injury claim and the related bills. Now, after sustaining an injury through no fault of their own, their only legal remedy is taken away from them to satisfy creditors.

So, as always, be as candid as possible with your injury lawyer. Tell him or her everything of a personal financial nature, even though it might seem embarrassing. Complete candor can actually save your case.

Image credit: Anatolii Babii

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