If you file for bankruptcy, it may have a big effect on your case. It will depend upon on whether you file a Chapter 7 or a Chapter 13 Bankruptcy.
In either a Chapter 7 or a Chapter 13 Bankruptcy, you have a continuing duty to disclose your accident. This is true even if you haven’t yet made a claim or sued the liable party.
This continuing duty exists up through the time that you voluntarily dismiss your bankruptcy case, dismissal by the Court, or the court orders a Bankruptcy discharge.
If you don’t let the Bankruptcy court know about your personal injury case, you may face penalties. Then the responsible party in a personal injury case can argue that:
- The personal injury case should be permanently dismissed (judicial estoppel).
If you’ve already been discharged from bankruptcy, the trustee can argue that:
- The bankruptcy estate should be re-opened. You would then owe the bankruptcy estate all of the personal injury settlement money.
The trustee can also argue that you should:
- Have to pay the trustee’s expenses and its attorney’s fees for its investigation into your bad faith conduct.
- Be charged with a felony and be arrested for fraud.
Personal Injury Claim Before Bankruptcy is Part of Bankruptcy Estate
One similarity between a Chapter 7 or a Chapter 13 bankruptcy is that any personal injury that a debtor has before the Bankruptcy petition becomes part of the bankruptcy estate. 11 U.S.C. § 541, 11 U.S.C. 1306(a)(1).
Chapter 7 Bankruptcy
In a Chapter 7 Bankruptcy, your estate is liquidated (sold off). Most of your debts are discharged.
A Chapter 7 panel trustee is appointed to administer the estate. If you file a Chapter 7 Bankruptcy before the date of the accident, your personal injury case is yours to keep. The trustee can’t touch your case.
If your accident happened before you filed a Chapter 7 Bankruptcy and before the Bankruptcy is discharged, then the Bankruptcy trustee owns the case.
Chapter 13 Bankruptcy
A Chapter 13 is a reorganization for a person with steady income. A Chapter 13 trustee is appointed to administer the estate. The debtor must pay all or some of his/her debts from the future disposable income over a 3 to 5 year time frame.
Most unpaid debt after you complete the Chapter 13 plan payments is discharged. The debtor keeps his/her property.
If you file a Chapter 13 Bankruptcy before or after the date of the accident, your personal injury case is still yours. However, the trustee and court must approve the personal injury settlement.
You have continuing duty to let the Bankruptcy court know of any personal injury claim that you have.
Did someone’s carelessness cause your injury in an accident in Florida, or on a cruise or boat?
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