How Bankruptcy Affects Accident and Other Personal Injury Cases
Posted by automobileaccidents, 01/08/2018 11:47 am
The effects of automobile accidents and slip and fall cases can be financially, physically, and emotionally devastating. It can be even more difficult when it is determined that the client is partially or completely responsible for the accident. If a person has little or no insurance when an accident happens, their finances may be ruined for years to come.
Bankruptcy After an Auto Accident
If a person is financially responsible for an auto accident, they and their attorney should evaluate every available option, such as chapter 7 bankruptcy. Here, the client may be able to discharge some of their debts, depending on their specific circumstances. Typically, accident-related debts are dischargeable, whether they’re related to property damage or personal injury, as long as they’re listed on the bankruptcy petition. However, debts related to DUIs that cause wrongful death cannot be eliminated.
Malicious or Willful Events
Another notable exception is if the auto accident resulted from a malicious or willful injury caused by the client to another entity or piece of property. A good example of this is if a person deliberately ran their car into a neighbor’s vehicle. Under such an exception, both property damage and personal injury cannot be discharged during a bankruptcy case.
Bankruptcy and Other Personal Injury Cases
If a client’s personal injury case is actionable but they’re facing lawsuits and collection attempts by creditors, Chapter 13 is typically the right solution. Here, the client is protected from further collection attempts by bankruptcy’s automatic stay rule. Rather than the case being turned over to the court-appointed trustee, as in a Chapter 7 case, the debtor’s attorney represents their interests and those of the bankruptcy estate.
Consider Chapter 13 Instead
What happens if someone is financially responsible for debts arising from a DUI or a willful injury, but they don’t have the money to pay? Although these debts cannot be eliminated in Chapter 7 bankruptcy, a client can request a Chapter 13 bankruptcy that allows them to repay the debt over a three- to five-year period. If the debts aren’t repaid within that time due to a person’s financial circumstances, they can always file another Chapter 13 case to get more time to pay.
The time after a car accident can be a devastating one for everyone involved. If a client owes debts related to an auto accident, they should seek advice from an experienced bankruptcy lawyer. These attorneys can help clients either eliminate debts through Chapter 7 or repay them in Chapter 13. Either one of these options can help a person move on with their life.