How Does Bankruptcy Affect My Personal Injury Claim?

by Harrison B.
(Balcones Heights, TX)

If you are speaking of your own bankruptcy, the easy answer is; probably not at all. Bankruptcy has no impact on the value of your claim. If any of your medical treatment providers have already presented liens for their unpaid bills against your personal injury settlement, those liens will still exist. Hopefully it was not the injury that caused your bankruptcy and if it was, you probably already have an attorney advising you on those matters, and that is a good thing.

If you are speaking of bankruptcy filed by the tort-feasor (the at-fault driver or Plaintiff in your case), then there will be some affect on your personal injury claim but only if the value of the claim is more than the tort-feasor’s bodily injury liability coverage. By filing bankruptcy, the tort-feasor caps your potential compensation at his policy limits.

For example, say that John Smith was at fault for an automobile accident in which you were seriously injured. You, Mr. Smith’s insurance company, and your attorney (if you have one) all agree that your personal injury claim is worth $35,000. (This is only an example and John Smith is a fictitious figure.) Mr. Smith’s insurance policy only has a $20,000 bodily injury liability limit and there is no other insurance available to you, but Mr. Smith has some other assets that your attorney believes she may be able to get for you to make up the difference. However, before that happens, Mr. Smith declares bankruptcy. You are only able to get the $20,000 from his insurance policy.

This article is approved for informational purposes and is not intended to take the place of competent local legal counsel.

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Invitation 1 - All-purpose.