If the bankruptcy is closed and paid in full, can they take my settlement? 19 Answers as of January 20, 2015

I filed for a chapter 13 in 2006 and the bankruptcy was paid off in 10/2012. I filed a lawsuit in 4/2012 and now they are ready to settle and I am being told because of the bankruptcy I may owe this to that claim. The bankruptcy is closed and it was paid in full, can they take my settlement?

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

Free Case Evaluation by a Local Lawyer: Click here
Law Office of William Stoddard | William Stoddard
If it was paid in full, so that all creditors got 100%, then your settlement cannot be an issue. however, did you have the claim when you filed the chapter 13? If you did and did not report it, the trustee might have a claim against it for fees he/she should have collected being involved in managing your estate. Although the trustee could probably be talked out of it. I presume you had attorneys working on the claim that is being settled. If the claim arose after you filed the bankruptcy, then it is an after acquired asset which could not have been administered by this trustee, so your current attorneys should be able to get the trustee to agree. Now if the creditors were not paid 100% in full, well whether you had it when you filed or got it after, there are provisions that state that any special collection (like an inheritance - or in your situation - a settlement) can be pursued to make the creditors whole even if the bankruptcy is closed, so long as the special collection has occurred in a certain amount of time after the closure of the bankruptcy. It would have to look up the exact timing, but if you are being told it might be an issue with the bankruptcy trustee, then it probably is in in the capture period of the code. Ask your attorneys to do some checking for you.
Answer Applies to: Washington
Replied: 1/20/2015
Ronald K. Nims LLC | Ronald K. Nims
Because the your claim existed before the bankruptcy was closed, the court has the right to the proceeds of the claim unless it falls within an exemption.
Answer Applies to: Ohio
Replied: 1/19/2015
The Orantes Law Firm
The Orantes Law Firm | Giovanni Orantes
If your plan paid 100%, the settlement should be yours, though the date when the facts for the lawsuit arose may affect that. However,if your plan did not pay 100% to unsecured, you should consult an experienced specialist to determine to whom the settlement belongs. Of course, depending on the nature of the lawsuit, it may be exempt and belong to you anyway. in any event, you're not providing enough facts to give you a complete answer and the parties to the settlement agreement would want an expert to tell them to whom the settlement belongs.
Answer Applies to: California
Replied: 1/19/2015
You should let your bankruptcy attorney know about this and also the Office of the Ch 13 Trustee. Since the claim we filed during the course of the bankruptcy the trustee may have an interest in the settlement.
Answer Applies to: Minnesota
Replied: 1/16/2015
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
If the lawsuit was not disclosed the bankruptcy estate may have an interest in it. I suggest you see a bankruptcy lawyer. Find one at nacba.org. There are several variables here that have to be looked at.
Answer Applies to: California
Replied: 1/16/2015
    J.M. Cook, P.A. | J.M. Cook
    If you paid 100% of your debts in the bankruptcy, your settlement is safe. If you paid the creditors less than 100%, then your creditors are entitled to the proceeds from this lawsuit which was an asset of your estate. Of note, certain types of recovery would be exempt. Consult with your bankruptcy atty to see if you may be able to exempt the settlement.
    Answer Applies to: North Carolina
    Replied: 1/16/2015
    Stephens Gourley & Bywater | David A. Stephens
    If the plan was a 100% plan they cannot take the settlement. If is was not, you may have acquired the claim during the plan which makes it an asset of the estate, unless it is exempt, or the trustee waived the estate's claim.
    Answer Applies to: Nevada
    Replied: 1/16/2015
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Here is what is not clear about your question. You say that the bankruptcy was paid in full and you say that the bankruptcy was paid off. What you haven't said is whether all the creditors that filed claims in your case were paid 100% of their claims. If you had an asset at the time you filed or that you acquired during the bankruptcy that could have been used to pay creditors, when you received that assets isn't nearly as important as when you acquired the right to receive it. A lawsuit, even if the result isn't decided, is an asset that your creditors would be entitled to divide up in order to satisfy your debt to them. If you paid 100% of your debt in Chapter 13, great, no problem. But in most Chapter 13 cases, your creditors only get paid pennies on the dollar and the fact you paid what the court found you needed to pay, based on incomplete information, is a serious problem.
    Answer Applies to: Nevada
    Replied: 1/16/2015
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    If you paid 100% of your debts then there is nothing to take, if you paid less then 100% then they can take it.
    Answer Applies to: New York
    Replied: 1/16/2015
    Hoang & Tran PLLC | Adam Tran
    Possibly if this is windfall. Consult with your attorney and the trustee. Good luck.
    Answer Applies to: Texas
    Replied: 1/16/2015
    Patrick W. Currin, Attorney at Law | Patrick Currin
    The case has 180 days to reclaim property. Four years later they are out of luck.
    Answer Applies to: California
    Replied: 1/16/2015
    Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
    It's hard to say who we are in your question. Since you began the lawsuit while your chapter 13 was still pending? I think van what ever you get from the lawsuit belongs to the bankruptcy estate. Meaning that you would probably have to notify the trustee and give him some porch, or all, of whatever you get from this lawsuit. If, on the other hand, the cause of action arose before you filed your chapter 13, then the trustees cream on the proceeds is much weaker. Your best bet is to consult the lawyer who represented you in the bankruptcy, or if you were not represented, to consult a bankruptcy lawyer in your area very soon.
    Answer Applies to: Wisconsin
    Replied: 1/16/2015
    John W. Lee, PC
    John W. Lee, PC | Kim A. Lewis
    You haven't really provided enough information. When you say that you paid off your bankruptcy do you mean that you paid all of the creditors in full or did you simply pay what was required under the plan? From the dates you provided it appears that you were in bankruptcy for 6 years. Typically the longest plan would be for 60 months or 5 years. What type of lawsuit was it? Was the potential claim listed as an asset on your bankruptcy? Without actually reviewing your bankruptcy case and getting more specific information it is impossible to completely answer your question.
    Answer Applies to: Virginia
    Replied: 1/16/2015
    Tokarska Law Center
    Tokarska Law Center | Kathryn U. Tokarska
    The answer depends on more details. Discuss this with your bankruptcy attorney, without delay. When this claim arose will determine whether it should have been disclosed as an asset on your Schedule B under item#21. For example, if prior to the bankruptcy filing you are involved in a car accident that causes you injuries/damages. That claim is an asset and because the accident occurred prior to the bankruptcy filing it is an asset in existence prior to bankruptcy filing. Whether you actually pursued this claim after the bankruptcy is not relevant. When calculating the chapter 13 payment, the disposable income of the debtor and the reasonable and necessary living expenses are a factor, as well the amounts of any non-dischargeable debt and debt secured by collateral, which the debtor is intending to keep. But also importantly the creditors must receive the equivalent of liquidation value. To do a liquidation analysis, you list all of the debtor's assets and their corresponding values. Then you apply whatever exemptions the debtor is qualified to use. If you identify any non-exempt assets, in order for the debtor to avoid having to turn those assets over to the Trustee for liquidation the Plan Payments must also provide for the value of those non-exempt assets. You do not worry about liquidation value if the chapter 13 is a 100% plan, meaning that all the creditors received 100% of what was owed to them. Call your attorney right away.
    Answer Applies to: California
    Replied: 1/15/2015
    Barnes Law Firm, LLC | Aunna Peoples
    This depends on a number of factors. If you had a 100% plan that paid all filed claims in full, then there should not be a problem. If not, did you include the cause of action on which the lawsuit is based in your bankruptcy schedules? If so, then you may be able to keep the proceeds. You will need to speak with your bankruptcy attorney and have the attorney contact the Trustee's office as it sounds like you will need something from the trustee before you can complete the settlement.
    Answer Applies to: Missouri
    Replied: 1/15/2015
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    You need to speak with your chapter 13 lawyer. The answers depends upon when your claim/injury/right-to-sue arose, whether there are any exemptions that would protect the settlement, whether the claim was listed as an asset in your bankruptcy, whether the appropriate exemptions were claimed, etc. Your lawyer is really the best person to try to answer your questions since exemptions and policies vary significantly from one jurisdiction to the next.
    Answer Applies to: Colorado
    Replied: 1/15/2015
    Scott Goldstein | Scott Goldstein
    Yes. If you didn't pay 100% that settlement is part of the estate.
    Answer Applies to: New Jersey
    Replied: 1/15/2015
    Bensamochan & Poghosyan LLP | Eric Bensamochan
    No. If your case were closed and you received a discharge, then nobody else can take your claim, especially if your bankruptcy was closed back in 2012.
    Answer Applies to: California
    Replied: 1/15/2015
    D.J. Rausa, Attorney at Law | D.J. Rausa
    You will need to contact your trustee so he can abandon any interest in the lawsuit. It may be necessary to go into court for an order.
    Answer Applies to: California
    Replied: 1/15/2015
Click to View More Answers:
12 3 4 Free Legal QuestionsConnect with a local attorney