If you have a personal injury claim from an automobile accident, a medical malpractice claim or any other injury claim in Atlanta, Georgia, you may want to think twice about filing Chapter 7 or Chapter 13 bankruptcy. Filing bankruptcy while involved in a personal injury claim is possible but you should definitely consult with both a personal injury and bankruptcy lawyer before moving forward. Here are some considerations about personal injury and bankruptcy in Georgia:
1. A Personal Injury Claim Is An Asset in Bankruptcy That You Must Disclose, Even if it Does Not Involve a Lawsuit.
When you make a claim for personal injury (or workers’ compensation) by pursuing insurance proceeds from the other driver or whoever caused your injury, the bankruptcy court considers the claim an asset, even if you are not involved in a lawsuit or received money yet. Thus, the claim must be disclosed in your bankruptcy petition as an asset. It is very important that you tell your personal injury lawyer if you consider filing for bankruptcy. If you are already involved in a bankruptcy case and have a potential personal injury case, you need to tell both your personal injury lawyer and your bankruptcy lawyer!
2. If You Have a Personal Injury Lawyer Handling Your Injury Claim And You File Bankruptcy, the Court Must Approve Your Personal Injury Lawyer and Settlement
When you file bankruptcy in Georgia and you have a pending personal injury claim, your personal injury lawyer must file what is known as an “Application to Employ Special Counsel” in bankruptcy court. That is a request to the court to approve your personal injury lawyer for handling your personal injury claim. Further, the final settlement must be approved by the bankruptcy court as well.
3. Filing Chapter 7 Bankruptcy in Georgia Can Subject Your Personal Injury Claim to Taking by the Trustee to Pay Creditors
If you have a personal injury claim in Georgia, a bankruptcy trustee in a Chapter 7 case can potentially take any money you are paid in a settlement. Filing Chapter 7 in Georgia means that the trustee assigned to your case steps into your shoes to handle your unexempt (there are protections for property as explained in our bankruptcy exemptions in Georgia article) assets. You have limited protection of your personal injury settlement money. Thus, if you have a pending personal injury claim and you are considering filing bankruptcy, you should consult with your personal injury attorney and your bankruptcy attorney to see what the best course of action is for you.
4. Filing Chapter 13 Bankruptcy In Georgia Can Require You To Pay Your Personal Injury Settlement To Creditors
Just as in a Chapter 7 case, filing Chapter 13 in Georgia when you stand to receive a personal injury settlement can set you up to have to pay your settlement proceeds to the Chapter 13 case for disbursement among your creditors. Thus, if you need the personal injury settlement proceeds for future medical care or other necessities and cannot afford to pay it to other creditors, consult your personal injury and bankruptcy lawyers before you file Chapter 13 in Georgia!
5. Filing Bankruptcy Can Harm Your Personal Injury Claim
Having a personal injury claim and filing bankruptcy in Georgia can weaken your personal injury case because the insurance company and the defense lawyers involved know that if you fail to disclose your case in bankruptcy, it can be extremely harmful and even extinguish your claim. Further, even if you do disclose your case in your bankruptcy petition, the fact that you are in financial trouble could suggest to the insurance company that you will take less money to settle your case. On top of that, the requirements that the bankruptcy court approve your personal injury lawyer and settlement complicates matters.
It is extremely important that you disclose personal injury information to your bankruptcy lawyer and bankruptcy information to your personal injury lawyer. If you have any questions about bankruptcy and personal injury in Georgia, call the Law Offices of Betty Nguyen Davis for a consultation.