Why Not to File Bankruptcy If You Have a Personal Injury Claim

Why Not to File Bankruptcy If You Have a Personal Injury Claim
June 23, 2014 jamesludlow

During this time of economic turmoil and high unemployment, it‘s tough for anyone to keep their heads above water financially.  This is especially tough if you’ve suffered a serious injury, have thousands of dollars in unpaid medical bills, and can’t work because of your injury.  In addition to all of the extra expenses, all of the usual monthly bills, such as a mortgage, car, and student loan payments continue to pile up beneath you.  Under these circumstances, who can blame anyone for thinking about bankruptcy?

However, the unfortunate truth if that if you file for bankruptcy, the right to receive any financial compensation for your injury claim goes to the bankruptcy trustee instead of the injured person.  In fact, any money owed by the insurance company for the person who caused the accident goes to pay creditors of the injured person. For this reason, the filing of a bankruptcy petition after an injury should be avoided at all costs.

This is especially true if the injured person is expected to incur future medical expenses.  While the filing of a bankruptcy petition may discharge medical expenses that were owed at the time of the bankruptcy filing, it does not affect the legal obligation of the injured person to pay for future medical expenses.  Instead, all rights that the injured person has to receive financial compensation, including compensation for future medical expenses, goes to the bankruptcy trustee to pay existing creditors.

So what can an injured person do when bill collectors are calling and the settlement of their injury claim may be many months away?  That’s where the services of a skilled personal injury attorney can be very valuable. I have had many clients where I contacted their creditors and explained that if they would be patient, my client would pay what they owed when their personal injury claim settled.  In most instances, the creditor understands that they are likely to be paid more if they worked with me as compared to what they might get if the client filed for bankruptcy.  In addition, because the client was now represented by an attorney, all those harassing phone calls by creditors to the client ceased. This enabled the client to concentrate on what was most important—recovering physically from their injury.

If you’ve been injured by the negligence of another person and wonder how you are going to survive financially while your claim is pending, call Ludlow Law for a free consultation and case review.  We’re here to help!