If you recently won a personal injury lawsuit, you may feel relief and a sense of accomplishment from the verdict. However, if you're contemplating bankruptcy, you might wonder if this money is at risk.
Filing for bankruptcy can be a difficult decision, but it doesn't necessarily mean you'll lose your personal injury settlement or award. In this post, we'll explore the relationship between bankruptcy and personal injury awards so that you can better understand how filing for bankruptcy might impact your judgment amount.
Chapter 7 Bankruptcy & Personal Injury Awards
Chapter 7 bankruptcy involves the liquidation of non-exempt assets to pay off your creditors. In Florida, a personal injury award or settlement isn’t considered exempt; that said, you can protect up to $1,000 by leveraging the wildcard exemption.
You may have heard that federal bankruptcy exemptions allow people to protect more money specifically from personal injury lawsuits. While this is true, you can’t use these exemptions and must only use Florida’s series of exemptions.
Chapter 13 Bankruptcy & Personal Injury Awards
Chapter 13 bankruptcy is different from Chapter 7 and doesn't involve selling off assets to pay creditors. Instead, you'll make payments to the bankruptcy trustee for a specific period of time, normally three to five years.
If you file for bankruptcy under Chapter 13, you may be able to keep your personal injury award if it's not part of your disposable income. It's important to note that if you file for Chapter 13 bankruptcy, you'll need to obtain court approval for any large purchases or financial decisions.
Seek Legal Advice
If you're considering filing for bankruptcy and have questions about your personal injury award, it's important to seek legal advice. A bankruptcy attorney can guide you through the bankruptcy process and help you understand how your personal injury award will be impacted. They can also determine if there are any exemptions available to protect your award from creditors.
By seeking legal advice, you'll have a better understanding of your legal options and can make an informed decision about filing for bankruptcy.
For more information about this topic, contact Buchalter & Pelphrey Attorneys At Law online today.