Getting injured in a car accident is an everyday story that you may get to hear in the US. Most of the people incur overwhelming debt while managing high medical bills. If you have met with an accident recently, then you’re not required to worry as the negligent party may be ultimately be liable to pay for the bills incurred by you (personal injury claimant). However, you need to know that settling a personal injury case can take a long time to settle. In this situation, you may suffer from financial hardship and end up incurring overwhelming debt. Therefore, this stressful financial situation may compel you to file bankruptcy to halt harassing collection activities. But filing bankruptcy may have negative impact on your situation.
What is the effect of scheduling the claim?
When you file under Chapter 7 or 13 Bankruptcy you need to include your tangible or intangible property along with the debts you want to discharge in bankruptcy. Make sure you complete your bankruptcy counseling before you file petition with the court. Generally, personal injury claim does not have account number and there is no guarantee whether you can manage to recover the claim. Your proceeds from personal injury claim can be considered as property of the bankruptcy estate. Make sure the proceeds are listed on a schedule of intangible property. If you fail to list the personal injury claim on a bankruptcy schedule, then the court may disapprove your petition with the court.
Are you aware of the role of the trustee?
You can manage to find your own personal injury attorney to represent you in the bankruptcy court. When you file petition with the bankruptcy court, your personal injury claim is considered to be property of the bankruptcy estate. In this situation, the bankruptcy trustee becomes the client of the personal injury and he’ll receive proceeds from the personal injury claim. Therefore, the trustee has the right to retain and fire attorneys, and he has the right to pass judgment whether to accept a settlement offer.
You may have the right to make decision on your personal injury settlement only if the trustee discards the claim. Therefore, the role of the trustee is to manage the estate for the benefit of the creditors, so that they retrieve the owed amount.
How the settlement proceeds are distributed?
However, the bankruptcy trustee may turn down personal injury claim that is below the exemption amount. If the amount is really small, then trustee may discard the claim that has become a part of the estate property. The trustee uses proceed in order to pay off the creditor’s claims. However, under 11 U.S.C. Section 522 you may avail the exemptions for damages for permanent bodily injury and future special damages. Under 11 U.S.C. 511(d)(11)(B) can help you exempt amounts that is required enough to support you if the case involves wrongly death of a person.
What are the other the effects of failing to schedule the claim?
If you fail to schedule personal injury claim in a bankruptcy petition, it may adversely affect your injury claim and your bankruptcy case. However, your bankruptcy petition can be disapproved if you’re unable to include all your property while filing petition with the court. In case you plan not to reveal some of the property, the court may consider you to be a trickster. The bankruptcy court may consider it a crime for which you can be prosecuted.
Therefore, you need to be careful while you file petition with the bankruptcy court while you schedule the claim.
Author Bio : Dan Marshall is a financial writer and enjoys writing articles on the global financial situation, bankruptcy, making money online, the stock market, debt consolidation, and mortgages along with other finance-related topics.
THANK YOU DAN FOR YOUR GUEST POST!