I have been handling car crash and other personal injury cases in North Dakota for more than 30 years. For most people that have been injured in a car crash it is their first time dealing with attorneys and insurance companies. There are a number of things that you should know if you are making a claim for injuries that your suffered in a car crash. I have put together some basic information that will help you understand the process as you obtain compensation for your personal injury.
One topic that you should understand is the effect of filing Bankruptcy while your injury claim is pending.
Serious injuries caused by car crashes can create significant financial strain on the injured victim. Car crash injuries may result in the loss of employment or a reduction in work hours. In addition to medical bills that are initially paid by your no-fault insurance, you may incur additional expenses that are not covered by your insurance.
In many cases your injury claim may take many months to be resolved. Initially your medical condition must stabilize before your damages can be accurately assessed. Also if your case requires the filing of a lawsuit it may be 12 -18 months from the time your lawsuit is commenced until the Court sets a date for your trial.
You must inform me if you are considering filing bankruptcy before your injury claim is finally resolved. If you do file bankruptcy you must list your injury claim as an asset. You must tell your bankruptcy attorney about your pending personal injury claim and have your bankruptcy attorney contact me so we can coordinate what is being done.
Some Courts have ruled that if you do not list your personal injury claim as an asset in your bankruptcy that you are abandoning the claim. If the Court rules that you have abandoned the claim you can be prevented from collecting any money for your personal injuries.
If a bankruptcy is filed, that filing can have significant adverse effects on potential settlements. As you all know, the filing of the bankruptcy petition operates as a stay on any act that attempts to recover on a claim against the individual (now “debtor”) that arose before the filing. Second, an estate is created, which consists of all property in which the debtor has an interest. (To play it safe, there would be nothing wrong with the debtor claiming an interest in a potential personal injury recovery). Third, a trustee is appointed to administer the bankruptcy estate, that is to administer the orderly liquidation of the debtor’s non-exempt assets, and payments of the proceeds to creditors of the debtor per rata, according to an order of priorities.
Historically, the purpose of exemption laws has been to allow people to retain those items of property essential to daily life. If property is exempt, the trustee in bankruptcy has no interest in it and the debtor retains his interest in the property.
11 U.S.C. 522(d)(11)(D) – The federal exemption system contains an exemption for payments on account of personal bodily injury, not to exceed $20,200. Specifically the law provides an exemption for “a payment, not to exceed $20,200, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss….”.
N.D.C.C. § 28-22-03.1(9)(d) – This statute is very similar to the federal exemption statute in that it limits “a payment, not to exceed $18,450, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is dependent”.
There may be other federal or state exemptions that can be used to protect your personal injury settlement from being turned over to your bankruptcy trustee. The key in this situation is communication to me and to your bankruptcy attorney before filing your bankruptcy so appropriate action can be taken to protect your personal injury claim.