Can a Personal Injury Settlement Affect My Bankruptcy?
Posted on February 24, 2021 in Portland Personal Injury Lawyer
If you or somebody you care about has been injured due to the careless or negligent actions of another individual, business, or entity, you will likely be able to recover some sort of compensation. This includes coverage of your medical bills, lost income, household out-of-pocket expenses, and more. However, what happens if you are going through Chapter 7 or Chapter 13 bankruptcy at the same time you are expecting a personal injury settlement. Here, we want to discuss how your bankruptcy could be affected by your personal injury settlement.
Understanding the different types of bankruptcies
When a person goes through bankruptcy in Oregon, it will typically be classified as Chapter 7 or Chapter 13. When a Chapter 7 bankruptcy is necessary, a bankruptcy trustee will typically take control of nearly every asset of the person filing. This trustee will then decide which debts will be paid in which ones should be discharged. There are various types of assets that the person filing for bankruptcy will get to hold onto, though these assets are limited to what the person needs to survive day to day life.
Chapter 13 bankruptcy operates a bit differently. With this type of bankruptcy, a person will seek to restructure their debts to allow for the repayment of creditors at a reduced amount over a longer time period. A bankruptcy trustee will determine the current value of the assets and current debt when determining repayment plans.
Will a personal injury settlement be taken as part of the bankruptcy?
First, it is important to distinguish between whether or not you have already received your personal injury settlement or whether it is pending. If you have already received a personal injury settlement, then any compensation you have gained will be counted towards your total assets in respect to the bankruptcy.
Even if your personal injury claim is pending, you can certainly expect the bankruptcy court to factor in the potential settlement. However, each state does have certain exemptions when it comes to what kind of property the bankruptcy filer gets to keep. Usually, you can expect this property to revolve around necessities such as a dwelling, vehicle, clothing, some jewelry, and various other items.
When we turn to ORS Section 18.345(1)(k), we can see that this law protects up to $10,000 in personal injury settlement funds for an individual or $20,000 for personal injury settlement funds if a married couple filed jointly for bankruptcy. Additionally, ORS Section 18.345(1)(L) protects $10,000 in compensation for loss of future earnings for an individual or $20,000 for loss of future earnings for a married couple (to the extent that these earnings are needed for supporting the individual or their family).
Working with an attorney is necessary in these cases
If you find yourself in the middle of both a bankruptcy claim as well as a personal injury lawsuit, then you are undoubtedly going through a stressful time in your life. Both of these types of claims can become incredibly complicated, and you do need to work with an attorney for each separate claim. Your bankruptcy attorney will advise you about whether or not you are able to exempt your personal injury settlement. A personal injury attorney will be the one to handle every aspect of your injury claim and ensure that you receive maximum compensation for your losses.