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Can The Bankruptcy Court Take My Personal Injury Settlement?

If you have been hurt on the job or in any other type of accident that wasn’t your fault, chances are you have made a claim against the negligent party. Most personal injury cases are settled out of court, but do take time. If you have filed for bankruptcy and have a pending personal injury case, you are smart to be concerned about what will happen to any settlement you receive.

The bankruptcy laws require certain things of the debtor, among those things are the following:

  • Full disclosure of all assets and all debts.
  • Listing any potential windfalls you might receive, such as an inheritance or settlement from a lawsuit. This includes a worker’s compensation case or a personal injury matter.
  • Claiming an exemption for assets that fall within the exemption rules.

If you fail to disclose any of the above, you run the risk of having your bankruptcy case dismissed. With regard to personal injury settlements, the ability to claim the any award as exempt lies within not only the bankruptcy laws but also applicable state laws. Sometimes the state law provides more favorable treatment to what can be exempted, and sometimes taking the standard federal bankruptcy exemptions is more advantageous. It is crucial to know which exemption is best for you, because personal injury settlements are considered an asset and a part of your bankruptcy. The role of the bankruptcy trustee is to administer the assets, and this includes locating any assets that are not exempt or encumbered by a lien. When the trustee finds such an asset, it is within the trustee’s power to seize that asset and use it for the benefit of repayment to your creditors. Depending on the severity of your injuries, and likely settlement amount, it could make more sense to try and hold your creditors at bay by negotiating repayment terms with them. We can help, by contacting your lenders and handling the negotiations. We know fielding those calls is time consuming and can cause added stress when you are injured. Let us help you by contacting us today for more information about how a personal injury lawsuit impacts your potential or pending bankruptcy case.


If you have questions about bankruptcy, call our office for answers. Call a Plantation, Florida debt relief attorney today for more information.

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