Woodland Hills Personal Injury attorney invariably has cases in which a Bankruptcy is filed by one of the parties involved. This can be tricky and difficult. Fortunately, Mr. Goldberg is surrounded by top attorneys in all fields, including Bankruptcy. Mr. Goldberg invited top Los Angeles Bankruptcy attorney Mark Markus to comment on “Bankruptcy And Personal Injury Claims: How Will It Affect You?”
Debts arising from or related to personal injury are usually dischargeable in bankruptcy. But not always. If you were at fault and caused a personal injury to someone, this will show you which types of personal injury claims can be discharged in bankruptcy. Similarly, if you are a victim of a personal injury, this article will show whether what is owed to you can be discharged. Finally, this will discuss what happens when the injured party files a bankruptcy case.
WHAT HAPPENS WHEN THE PARTY WHO CAUSES THE INJURY FILES BANKRUPTCY?
Unless there is an exception, the rule is that all debts incurred related to causing a personal injury are dischargeable in a bankruptcy case. So if, for example, a car accidentally hits you while riding your bicycle because the sun was in their eyes, and you are injured and have to expend money for repairs and medical treatment, the driver of the car (and the owner of the car) can file bankruptcy and eliminate the obligation to pay you.
Exception: Driving While Intoxicated
Debts owed due to death, or personal injury caused by the operation of a motor vehicle, vessel, or aircraft are NOT dischargeable in bankruptcy if the operator of the above transports was intoxicated from using alcohol, a drug, or another substance and such operation was unlawful.
Exception: Willful And Malicious Injury
This category excepts from discharge any debt where the injury and the act causing the injury were both intentional. For this exception to apply, the person causing the injury must do an intentional act and also intend it to do harm. For example, if someone shoots a gun into a watermelon and one of the seeds flies through the air and hits you in the eye, requiring you to get $100,000 in medical treatment, they can most likely avoid reimbursing you that $100,000 in damages if they file a bankruptcy case. However, if you can somehow prove that the person intended that the watermelon seed to hit you in the eye and injure you, then the debt might survive the bankruptcy. This exception is often difficult to prove.
Time For Objection To Discharge
In order to avoid the above debts from being discharged in a bankruptcy, the creditor (the injured party) may need to prove their case. For the intoxication exception, there is no time limit for objecting to the discharge of the debt. It can be done during, or even after the bankruptcy case is completed. It is essentially a self-executing provision, unless the debtor (person who caused the injury) for some reason disputes that the debt is still owed.
For the willful and malicious exception, the creditor is required to commence an adversary proceeding (like a lawsuit) in the bankruptcy case to prove the required elements in order to have the Judge rule that their debt is not discharged in the bankruptcy. And that adversary proceeding must be filed by the deadline set in the case, which is no later than 60 days after the first date set for the Meeting of Creditors (which is usually about a month into the case). So basically the deadline is about 90 days after the filing of the case.
Failure to timely object is a waiver of the right to do so.
WHAT HAPPENS WHEN THE INJURED PARTY FILES BANKRUPTCY?
When one files a bankruptcy case, they are required to list all of their assets and debts. If you have been injured and have either an actual or potential lawsuit/claim against someone for injuring you, you must list that claim as an asset in the bankruptcy. Failure to do this can result in the loss of the right to pursue that claim altogether!
The value of the claim can also be important because, depending on which chapter of bankruptcy is filed, because you will need to exempt (i.e. protect) the personal injury claim in order to keep any proceeds that become available after settlement or judgment in your favor. Otherwise the bankruptcy trustee would take them.
California has two different sets of exemption schemes that can be used, one which fully protects any personal injury settlement, and the other which protects a certain amount (approximately $25,000). There are pros and cons for choosing either exemption scheme so you need to discuss your options with an experienced bankruptcy attorney in your area.
Today’s guest poster is Mark J. Markus. Los Angeles Bankruptcy Specialist.
Attorney Mark Markus has been practicing exclusively bankruptcy law in Los Angeles, California since 1991. He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization, AV-Rated by martindale.com, and A+ rated by the Better Business Bureau. He helps individuals and small businesses in the Greater Los Angeles Area of California with their bankruptcy issues. He can be found at https://www.bklaw.com .