Disbursement of Personal Injury Claims in Bankruptcy

 

If you filed for bankruptcy and have an open personal injury claim bankruptcy can have an impact on disbursement of your personal injury claims.

 

Chapter 7 bankruptcy any and all unexempt property is liquidated by the trustee and your debts are discharged.  So, the disbursement from your injury claim may be subjected to liquidation. The trustee controls your Injury claim disbursement after returning your exempted portion. The law is such that the injured person is no longer the actual plaintiff, but the bankruptcy estate is.

 

The exemptions on assets are according to the state and/or federal law. So, how much out of your disbursement is exempted by the bankruptcy estate depends on where you live and the controlling law.   In New Jersey the controlling statute is 522 d(11)D and the amount is $21,625.00.  Additionally you can stack to the amount any remaining wild card exemption that has not been used up, that is, stack up any unused 522(d)(5).

 

Thus, in all these cases, the trustee can pay off the creditors using your personal injury disbursements which are not exempted. The only requirement is that actual event of the personal injury occurred before the bankruptcy case filing irrespective of time of the injury claim lawsuit.

 

In these cases it is important and essential that your personal injury claim attorney and bankruptcy attorney coordinate and the bankruptcy attorney will need to file a motion with the bankruptcy court to permit the bankruptcy estate to retain the personal injury counsel, as the attorney of record for the bankruptcy estate representing it in the personal injury litigation.