What happens in Florida when a personal injury lawsuit and a bankruptcy petition collide? This is a common problem for a lot of folks who find themselves in a financially difficult situation following a car crash or another accident.
Understanding your rights and obligations isn’t always easy. However, learning more can help you make the best possible decisions.
You have to disclose all potential claims when you file for bankruptcy
When you file for bankruptcy, you’re required to detail both all your current sources of income and any potential sources of income from money that you may be owed.
In practical terms, that means you need to let the bankruptcy trustee know that you have a personal injury claim pending. Unfortunately, unlike many other states, Florida has no blanket exemptions that allow you to keep the proceeds of your claim when it settles.
There is an exception to the rule that allows workers in certain hazardous occupations (such as railroad work and blasting and dynamite work) to keep the money from an injury claim. Most people, however, will be limited to the standard exemptions. That’s a very unsatisfying $1,000 for anything you exempt and up to $4,000 if you don’t use it as a homestead exemption.
You may have more options than you realize
This isn’t an insurmountable situation. Sometimes, timing is everything. It may be wiser to wait to file your bankruptcy petition until after your personal injury claim is settled, especially if you intend to file Chapter 7. However, you can explore other debt relief options in the meantime with the help of appropriate legal assistance.