If a personal injury defendant declares bankruptcy, it can significantly impact the plaintiff’s ability to recover damages. This complex situation intertwines two distinct areas of law: personal injury and bankruptcy. Understanding how these legal domains intersect is vital for any plaintiff pursuing compensation from a defendant who has declared or may declare bankruptcy.
When an individual files for bankruptcy, they are essentially stating that they cannot pay their debts. In response, the court issues an automatic stay, which halts most collection actions against the debtor. This includes lawsuits aimed at recovering payment for damages such as those in a personal injury case.
However, it’s important to note that not all debts can be discharged through bankruptcy. Certain types of obligations are exempted by law, including child support payments, some tax debts and student loans among others. Similarly, personal injury judgments may also fall into this category depending on the circumstances surrounding the case.
If the harm was inflicted intentionally or resulted from drunk driving for instance, then it is likely non-dischargeable in bankruptcy proceedings meaning that despite filing for insolvency protection; the debtor will still owe this debt after emerging from bankruptcy.
Nevertheless, collecting on a judgment against someone who has filed for bankruptcy can be challenging even if the debt is non-dischargeable. The debtor’s assets would have been liquidated to repay creditors during their insolvency proceedings leaving little or nothing left over for plaintiffs to collect upon.
In instances where the debt is dischargeable under Chapter 7 Bankruptcy – which includes most cases where negligence rather than intentional wrongdoing caused harm – once discharged by court order; plaintiffs lose their right to pursue further collection action against defendants.
Alternatively, if a defendant files under Chapter 13 Bankruptcy – often referred to as wage earner’s plan – they commit themselves to repay part or all of their debts over time via a court-approved repayment plan lasting three-to-five years typically. Herein lies hope for plaintiffs since some portion of what’s owed to them might be included in this plan.
In conclusion, when a personal injury defendant declares bankruptcy, it creates a complex situation that requires careful navigation. The plaintiff may still have options for recovery depending on the type of bankruptcy filed and the nature of the personal injury case. However, it’s essential for plaintiffs to consult with experienced legal counsel adept at handling both personal injury and bankruptcy matters to ensure they understand their rights and potential avenues for compensation.
Munley Law Personal Injury Attorneys
197 N Cedar St, Hazleton, PA 18201
15705369498
