Personal Injury Claims and Bankruptcy

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Personal Injury Claims and Bankruptcy

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Complete disclosure is very important, especially when it comes to bankruptcy papers, say lawyers of Dallas based bankruptcy law firm Thus, if you have any pending lawsuits or claims where you expect to get any award, you need to mention it in the bankruptcy papers. Not mentioning it may be interpreted as defrauding the bankruptcy court. Much emphasis is made on informing the court of any personal injury claims while filing for bankruptcy because any settlement or award you get as a result of that claim becomes a part of your bankruptcy estate. Anything you own including assets, property and claim awards which are non-exempt are part of the bankruptcy estate and are used to pay your unsecured creditors.

An instance of a bankruptcy filing in Illinois became complicated because the debtor had filed for a Chapter 7 bankruptcy after they had injured themselves in a store. They didn’t mention that they would be suing the store for a personal injury claim initially but later amended their bankruptcy petition to include the possibility of a claim. 6 months after they got the bankruptcy discharge, they filed the personal injuries claim against the store.

The store countered by filing a Motion for Summary Judgement arguing about full disclosure of the claim in the debtor’s bankruptcy petition, insinuating fraud on the debtor’s part. The debtor was able to successfully defend the motion. However, the Circuit Court did not see eye to eye with the defender regarding their conflicting position of regarding the claim in Bankruptcy and filing an injury suit in court. The debtor appealed again to overturn the courts’ ruling in favor of the store.

The 2nd District Appellate Court of Illinois overturned the Circuit Court’s decision as there was no substantial evidence to support the theory that the debtor had deliberately tried to defraud the court with their bankruptcy petition. The intent of defrauding could not be established and unclarity of personal claim petition could have been an honest mistake. An honest mistake could at times cost you a lot. If you wish to get rid of your debts through bankruptcy, it is important that you remember all your debts and claims and file the required papers. A skilled bankruptcy lawyer can be the difference between successful bankruptcy discharge and the burden of debt. You can consult with experienced bankruptcy attorneys by calling 888-297-6023.