Can a bankruptcy hold up a settlement case? 40 Answers as of January 15, 2014

Had a stroke due to prolonged use of hormone therapy.

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
A bankruptcy can allow the trustee to possibly seize your personal injury money so be careful and discuss your case with an attorney.
Answer Applies to: New York
Replied: 1/15/2014
James M. Chandler | James M. Chandler
Yes, the trustee could ask you to pay the money to him/her.
Answer Applies to: California
Replied: 1/15/2014
Lombardi Law Firm
Lombardi Law Firm | Steve Lombardi
Personal injury claims are affected when the accident happens before you file a bankruptcy petition and thus require special handling. We’ve been working with bankruptcy trustees for a little under thirty years to preserve value for the injured person while pursuing the claim for the bankruptcy trustee. We invite inquiries from either the injured party or the trustee who would like an Iowa personal injury attorney to assist with pursuing a personal injury claim or workers compensation claim. So let’s talk about how these are normally handled. First if you are the injured person or their guardian (parent or spouse) and the person injured intends to file for bankruptcy protection, call me before you file. I may be able to counsel you about how to avoid filing and preserving your case. But if you’ve already filed a petition for bankruptcy, don’t fret about it, but still call me so we can discuss how to maximize your claim. Understand that after you file the bankruptcy petition you no longer control the claim because you don’t own it, the bankruptcy estate owns it. But that won’t mean you don’t get any part of the settlement or award; you can, but only if you handle it properly. The biggest problems that I see are people who think they don’t have disclosed the personal injury claim as one of their assets when they declare what property they own. You do and the personal injury claims is an asset. Therefore it does need to be disclosed in your bankruptcy documents both to your lawyer and in what you file in the bankruptcy court; that way your creditors and the trustee will be aware of it and will have the option to waive any claim against it. I can’t stress enough how important this is. If you file the personal injury claim after filing a petition for bankruptcy you are not the real party in interest and the district court will dismiss your claim. If that happens after the statute of limitations runs you claim is dead as a door nail and worthless. So pay attention to what I’m saying.
Answer Applies to: Iowa
Replied: 1/14/2014
David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
It should not. But your claim is part of the bankruptcy estate and can be seized by the trustee and used to pay creditors. That is the short version.
Answer Applies to: Missouri
Replied: 1/10/2014
Law Offices of George H. Shers | George H. Shers
No court action can occur once a petition for bankruptcy has been filed. The parties can still discuss settlement and even reach one, but the court can not approve it.
Answer Applies to: California
Replied: 1/8/2014
    Stuart P Gelberg
    Stuart P Gelberg | Stuart P Gelberg
    Yes. You will need bankruptcy court approval.
    Answer Applies to: New York
    Replied: 1/8/2014
    Kirby G. Moss PC | Kirby G. Moss
    If the question is whether your bankruptcy will hold up your settlement of your injury case, the answer is that in most every case, the Trustee in the bankruptcy becomes the owner of the potential settlement and so, yes it could hold things up.
    Answer Applies to: Indiana
    Replied: 1/8/2014
    Law Ofices of Edwin K. Niles | Edwin K. Niles
    If you have a pending claim, that claim may be considered an asset of the bankruptcy estate, and any recovery may go to the creditors.
    Answer Applies to: California
    Replied: 1/8/2014
    Paul Whitfield and Associates P.A.
    Paul Whitfield and Associates P.A. | Paul L. Whitfield
    Bankruptcy judge can do about anything. he wants you to have assets to pay bills. Why don't you ask a bankruptcy lawyer and ask him to review your situation.
    Answer Applies to: North Carolina
    Replied: 1/8/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    Any potential claim you have against anyone else must be reported as a potential asset if you file bankruptcy. There are exemptions you could use to protect somewhere between $10,000 and $20,000 of the settlement you might get, but any amount you receive in excess of your available exemptions would have to be turned over to the bankruptcy trustee. This is not altogether a bad thing for you. A trustee likely has more resources than you to pursue a bigger settlement if s/he believes the claim is worth pursuing. If the trustee does not believe it is worthwhile, however, s/he could abandon it as an asset and leave you free to get whatever you can. In any case, a bankruptcy is not likely to delay your settlement significantly. But if your settlement could be a very substantial amount, you might want to wait and see what you get to determine if you could pay off all your debts and not have to file bankruptcy. For most people, it should be a last resort.
    Answer Applies to: Oregon
    Replied: 1/8/2014
    The Law Office of M Grater LLC
    The Law Office of M Grater LLC | Mark O. Grater
    If you were injured by a 3rd party prior to filing, it becomes an asset of the bankruptcy case and must be reported, if injured after the filing then the bankruptcy should not matter.
    Answer Applies to: Connecticut
    Replied: 1/8/2014
    James C. Hord, Attorney at Law | James C. Hord
    A bankruptcy can hold up a personal injury settlement, until court approval of the settlement has been obtained. Court approval is required in order to determine how much of the settlement can be claimed as exempt property, extent of any liens on the proceeds (such as medical bills), amount of attorneys fees, and other legal issues pertaining to the settlement. Once these issues are resolved, the settlement can then go through.
    Answer Applies to: North Carolina
    Replied: 1/8/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    Hopefully, you listed your claim as an asset in your bankruptcy case, and hopefully, you properly claimed any exemptions for it that you may be entitled to claim. If you did not, then you may have lost the right to receive any settlement proceeds. If you have a bankruptcy lawyer you should address your questions to him or her. If you so not have a bankruptcy lawyer, you may want to consult with one now.
    Answer Applies to: Colorado
    Replied: 1/8/2014
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    Assuming you are in the process of settling a personal injury claim/case then "yes" it could definitely interfere. What most people don't understand about bankruptcy is that once you file the appointed trustee takes control of all of your assets and creates a thing called a "bankruptcy estate". If you can exempt all the proceeds of the settlement then you should be fine. However, if you can settle it prior to filing it may be best. Whether you settle the matter now or the matter is still pending prior to the filing of your bankruptcy case, you will need to disclose that it is pending or that you recently settled it.
    Answer Applies to: California
    Replied: 1/8/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Sure, depending on the context. If the suit is against the debtor, the automatic stay would need to be lifted to proceed. If the suit is by the debtor, you need to determine if the proceeds of the suit belong to the debtor, to the bankruptcy estate, or are shared.
    Answer Applies to: Nevada
    Replied: 1/8/2014
    James E. Hasser, Jr. P.C.
    James E. Hasser, Jr. P.C. | Jim Hasser
    Bankruptcy can screw everything up if it's not handled right and coordinated between the bankruptcy lawyer and the personal injury lawyer. Tell both of them about the other and hopefully, they can get it straightened out for you.
    Answer Applies to: Alabama
    Replied: 1/8/2014
    LAW OFFICES OF CRAIG BURNETT | Craig Alan Burnett
    It might. If you are the claimant, your case would be considered an asset of your bankruptcy estate. Unless you can exempt it or compel its abandonment, your claim may be pursued by your bankruptcy trustee on behalf of your creditors.
    Answer Applies to: California
    Replied: 1/8/2014
    Vasilaros Legal,LLC
    Vasilaros Legal,LLC | Steven T. Vasilaros
    Yes. If the defendant has filed bankruptcy, a stay in the case will be granted pending the Bankruptcy Courts determination. If you have filed bankruptcy, you no longer "own " the claim: it is now under the control of the bankruptcy trustee.
    Answer Applies to: Florida
    Replied: 1/8/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    It depends on what you mean by settlement. If there is a court order approving the settlement and the order does not provide for any events of default then yes. However, if you failed to abide by the terms of the settlement and defaulted and the settlement order provides for what happens in that case, then that is the deal you made. A chapter 7 bankruptcy can discharge most settlements/orders.
    Answer Applies to: Nevada
    Replied: 1/8/2014
    Utah Injury Lawyer
    Utah Injury Lawyer | Will Rodgers
    Yes, a bankruptcy filing can delay settlement or payout of your case. I presume the BK was filed by the company that made the hormone that you were taking and which caused you to have a stroke, which would be the defendant in your case. Then, yes, it will delay settlement / payout of your case.
    Answer Applies to: Utah
    Replied: 1/8/2014
    David Kass | David Kass
    Yes. The Trustee in bk does a thorough ck of the bk petition and this could cause delay.
    Answer Applies to: New York
    Replied: 1/9/2014
    Moffa & Bonacquisti, P.A.
    Moffa & Bonacquisti, P.A. | John A. Moffa
    If you filed a bankruptcy case then the case/lawsuit does not belong to you to settle. It belongs to either the Chapter 7 Trustee (Chapter 7 Estate) or the Chapter 11 or 13 estate and that lawsuit/settlement money will be used to pay creditors and does not belong to you. Your bankruptcy attorney should have made this clear and your medical malpractice attorney cannot settle the case without bankruptcy court approval. So, the answer to your question is that there can be no settlement without Court approval and the settlement money is not yours unless an exemption applies. It is imperative you talk to your bankruptcy attorney. It might have been a mistake to file for bankruptcy if you did.
    Answer Applies to: Florida
    Replied: 1/8/2014
    Peters Law, PLLC
    Peters Law, PLLC | Mark T. Peters, Sr.
    If it is your case and your settlement, it may belong to the trustee. You need to talk with your bankruptcy attorney about it.
    Answer Applies to: Idaho
    Replied: 1/8/2014
    Hayward, Parker, O'Leary & Pinsky, Esqs.
    Hayward, Parker, O'Leary & Pinsky, Esqs. | Michael O'Leary
    Assuming that you are talking about a Chapter 7 bankruptcy, it would "hold up" the settlement of the personal injury case only marginally. Your Chapter 7 Trustee would have to bring on a motion in Bankruptcy Court to approve any proposed State Court settlement of the claim, which would result in a delay of a month or two, tops. You must understand, though, that your personal injury claim is an asset of your bankruptcy estate that is being administered by your Trustee, and the non-exempt portion of your settlement funds will remain in your Trustee's hands and be distributed to your creditors. As the interface between bankruptcy and litigation claims is somewhat involved, you should further discuss this matter with competent bankruptcy counsel.
    Answer Applies to: New York
    Replied: 1/8/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    That lawsuit is a part of the bankruptcy. If you do not have a lawyer you need to get one now.
    Answer Applies to: California
    Replied: 1/9/2014
    Candiano Law Office
    Candiano Law Office | Charles J. Candiano
    If you declare bankruptcy after making a personal injury claim, it becomes part of the bankruptcy estate which means you give it up. The settlement would be paid to the Bankruptcy Trustee instead of you. Consult your bankruptcy attorney to learn if there is any applicable exception.
    Answer Applies to: Illinois
    Replied: 1/8/2014
    Attorney & Counselor at Law | Jeffrey B. Hammerlund
    Yes a bankruptcy can hold up to a settlement and also the settlement can be included in the bankruptcy in distributed to creditors.
    Answer Applies to: Illinois
    Replied: 1/8/2014
    OlsenDaines, PC
    OlsenDaines, PC | Kristoffer Sperry
    If you have a pending lawsuit or cause of action that occurred prior to filing then that suit becomes property of your estate and the trustee assumes the right to settle or litigate it. The trustee may decide not to pursue it and return the suit back to you.
    Answer Applies to: Idaho
    Replied: 1/8/2014
    The Law Office of Stephen R. Chesley, LLC
    The Law Office of Stephen R. Chesley, LLC | Stephen R. Chesley
    A bankruptcy will stay all legal proceedings and depending upon the bankruptcy proceedings limit the amount you will be allowed to retain from the settlement because settlement would be part of assets.
    Answer Applies to: New York
    Replied: 1/8/2014
    Law Office of Shawn N. Wright | Shawn N. Wright
    If you are the one suing to obtain a settlement (you are the plaintiff) and you've also filed bankruptcy, then the Bankruptcy Court Judge in your case will have to ultimately approve your civil court case settlement. Does this mean that your settlement is "held up"? Not really, because this won't take very much time. Normally, the attorney in the civil case (in your situation, your personal injury case) will advise the Bankruptcy Trustee and get the Bankruptcy Judge to approve the terms of your settlement. This could take up to a month or so, but your injury case has probably taken at least a year, if not two or three years so far, so I wouldn't define that as being "held up". By the way, the Bankruptcy Judge will want to know whether this is a good settlement, and that you and your injury attorney aren't merely caving in and accepting a low-ball settlement amount. Normally, if you convince the Judge that it's a good settlement, then you should be okay.
    Answer Applies to: Pennsylvania
    Replied: 1/8/2014
    Peacock Law Group of the Lowcountry, LLC | Richard Peacock
    In SC, generally, if a Defendant declares bankruptcy during the pendency of a legal action, the legal action is stayed until the bankruptcy is concluded.
    Answer Applies to: South Carolina
    Replied: 1/8/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    Yes, because the trustee will want to see how much of a settlement you get and what each part is for (actual injury, pain and suffering, etc.).
    Answer Applies to: Michigan
    Replied: 1/8/2014
    Pennington & Martinez
    Pennington & Martinez | Dennis A Pennington
    Always. Your settlement would become property of the bankruptcy trustee.
    Answer Applies to: Louisiana
    Replied: 1/8/2014
    Law Offices of Ronald A. Steinberg & Associates | Ronald A. Steinberg, BA, MA, JD
    Whose bankruptcy? If it is the drug manufacturer, it will, because of the deductible amount it has to pay out of pocket.
    Answer Applies to: Michigan
    Replied: 1/8/2014
    Law Office of Stuart M. Nachbar, P.C.
    Law Office of Stuart M. Nachbar, P.C. | Stuart M. Nachbar
    If a Bankruptcy was filed while the claim was pending, and not settled, and you are now settling same, unless you have exempted out more than the settlement value and the Trustee has abandoned his interest in the claim, and the time for objecting to Exemptions has passed, then you should give the Trustee notice and yes it can delay the case.
    Answer Applies to: New Jersey
    Replied: 1/8/2014
    Mark S Cherry, Attorney at Law, PC
    Mark S Cherry, Attorney at Law, PC | Mark Cherry
    Yes. You must disclose any lawsuits as well as any right to file a lawsuit in your Bankruptcy. A trustee may claim the proceeds as funds for the creditors or may abandon the trustees interest. You must make sure you discuss this factor with your bankruptcy attorney prior to filing.
    Answer Applies to: New Jersey
    Replied: 1/8/2014
    Andrew T. Velonis, P.C.
    Andrew T. Velonis, P.C. | Andrew Velonis
    It can, but usually not by much: the Trustee will agree to have the personal injury lawyer appointed as "special counsel" and the case goes on. But you need to consult with a bankruptcy lawyer about the implications of what will happen to the money if the case is successful.
    Answer Applies to: New York
    Replied: 1/8/2014
    Hoang & Tran PLLC | Adam Tran
    There's not enough information here, but if the settlement is with a creditor, then yes.
    Answer Applies to: Texas
    Replied: 1/8/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    You have not given many details, but a bankruptcy may hold things up.
    Answer Applies to: California
    Replied: 1/9/2014
    William Bidwell, Attorney at Law | Bill Bidwell
    No, it will not interfere with a settlement. A settlement or award for personal injury is not included in the bankruptcy estate.
    Answer Applies to: Michigan
    Replied: 1/8/2014
Click to View More Answers:
12 3 4 5 6 7 Free Legal QuestionsConnect with a local attorney