One of the most common reasons to be filing bankruptcy is the medical costs. This could have occurred due to someone’s negligence and there may be a personal injury lawsuit in progress to avail in a reasonable claim for the damage caused. Whether or not the award is used to suffice the lender’s debt, depends on two factors. One is the amount of exemption available to the bankruptcy filer while filing chapter 7 and the other is the type of personal injury lawsuit award. The rules for availing exemption for the award may be complex and might also vary from state to state. If you reside in Los Angles & Dallas, TX do not forget to log on to https://recoverylawgroup.com/bankruptcy/ to learn more about the same.
What are the exemptions available at the filer’s disposal?
- If a bankruptcy filer receives compensation that is specified as ‘pain, suffering or future lost wages, the same can be excluded for the chapter 7 liquidation procedure. However, if the received compensation does not specify anything, then it might be deemed as compensation or special damages that can be utilized for releasing some of the borrower’s debt
- Similarly, the personal injury lawsuit award may also be provided for specific damages like medical bills, past lost wages, replacement costs, etc., which will be used to set off similar expenses or debts. For example, if an award specifically states for medical bills, the same will be used to set off any debt incurred with respect to medical expenses
- If the lawsuit for the award is pending and the potential award for the same would be under $15k, the bankruptcy trustee as per his/her wisdom might deem the same insignificant for bankruptcy proceedings and the bankruptcy filer might have the whole amount provided it remains below $15k once the judgment is completed.
- There is an exemption of $6k that bankruptcy filers can use to exempt any cash or property. This exemption if not used for savings or any other specific property, can be used to prevent $6k from the personal injury lawsuit award.
There can be many other ways to prevent or safeguard the lawsuit award or there can be some planning activities that can be done before or during bankruptcy proceedings. To ensure you don’t miss out on retaining your award during bankruptcy proceedings, dial 888-297-6203 to safeguard all or a maximum portion of your award money from bankruptcy liquidation.