Often, one of the consequences of a personal injury is a bankruptcy filing. You may be unable to work and meet your financial obligations and you may have no other sources of income. But what happens if you file for bankruptcy protection and then receive a settlement or a verdict in a personal injury lawsuit? What if your lawsuit is not resolved before the bankruptcy filing is finished? This blog outlines the rules governing if you can keep a settlement or verdict and, if so, how much you can keep.
When you file for protection under Chapter 7, you get to discharge certain debts, but you must also turn certain property over to the bankruptcy court, to be part of your bankruptcy estate. The proceeds of your bankruptcy estate are then used to pay part or all of the debt you owe your creditors.
If you have filed for protection under the provisions of Chapter 7 of the bankruptcy laws, any monetary award you receive, or will receive, becomes part of your bankruptcy estate. In fact, even if you have not filed a lawsuit at the time your bankruptcy is complete, if you are entitled to do so while your bankruptcy is in process, any money you would be entitled to receive in a lawsuit is the property of your bankruptcy estate.
The amount of the settlement or verdict that will be exempt from your bankruptcy estate depends on whether you choose the state or federal bankruptcy exemption. The New Jersey state bankruptcy exemption allows you to keep $1,000 of any judgment or settlement. The federal exemption is substantially higher–$23,675.
Contact Neuner & Ventura, LLP
We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.
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